Choose the correct answer for each question.

1. Which one of the following statements about internal performance reporting is true?
   Internal performance reports:

   1.   ?    Contain the same information as financial accounting statements, but they are produced monthly rather than annually.
   2.   ?    Can take any form that management chooses.
   3.   ?    Are required by an accounting standard to be based on the ‘Balanced Scorecard’ system.
   4.   ?    Always contain a mixture of financial and non-financial measurements.

2. Which one of the following statements is correct?
   A highly centralised organisation:

   1.   ?    Does not need any kind of performance measurement and reporting.
   2.   ?    Allows managers to retain close scrutiny and control over the business.
   3.   ?    Permits a substantial degree of autonomy to divisional managers.
   4.   ?    Is always less efficient than a decentralised organisation.

3. Which one of the following statements about divisional performance assessment is NOT true?

   1.   ?    A highly autonomous division is responsible for virtually all aspects of its operations.
   2.   ?    Divisional performance is required to be reported to the Customs & Excise authorities on a quarterly basis.
   3.   ?    Divisional managers should be assessed only on aspects of divisional performance over which they have control.
   4.   ?    The method of assessment of divisional performance varies, depending upon whether the division is an investment centre or not.

4. Baker Trueblood plc’s operations are broken down into divisional cost centres. Head office determines investment policy for its divisions and retains central control over selling, marketing and research and development functions. Raw material and labour costs are controllable at divisional level, but managerial salaries and benefits are determined at head office.
   
   The following costs are attributable to Division C’s operations for the year ended 30 June 20X8:
   
   

   	£000
   Depreciation of fixed assets	108
   Marketing manager’s salary	28
   Raw materials	488
   Factory labour costs	382
   Selling costs	45
   Repairs to fixed assets	12
   Cost of new product development	98

   
   
   What is the total of costs that are controllable by Division C?
   1.   ?    £980 000
   2.   ?    £1 161 000
   3.   ?    £1 088 000
   4.   ?    £870 000

5. In a division that is treated as a profit centre, which of the following should be used as the basis for assessing divisional performance?

   1.   ?    Divisional profit before tax
   2.   ?    Contribution
   3.   ?    Contribution less controllable fixed costs
   4.   ?    Divisional profit before head office cost allocation

6. Return on investment (ROI) is calculated using which of the following formulae?

   1.   ?    Divisional net profit
      
      Investment in net assets
   2.   ?    Divisional net profit
      
      Divisional investment in listed securities
   3.   ?    Divisional contribution
      
      Investment in net assets
   4.   ?    Net profit before depreciation
      
      Investment in net assets

7. 7. Which one of the following statements about goal congruence in a decentralised organisation is correct?
   Goal congruence:

   1.   ?    a) Involves the minimisation of inter-divisional rivalries in order to serve the best interests of the organisation as a whole.
   2.   ?    b) Means that all divisional managers are given the same level of profit-related bonus.
   3.   ?    c) Means that all possible steps should be taken by divisional management to achieve the goals of the individual division.
   4.   ?    d) Requires the achievement of organisational goals within a tight timeframe.

8. Which one of the following statements about non-financial performance measures is NOT correct?

   1.   ?    Non-financial measures do not involve the calculation or recording of any numbers.
   2.   ?    The most appropriate non-financial measures vary, depending upon the nature of the organisation.
   3.   ?    Non-financial measures should correspond as far as possible with the aims of the organisation as a whole.
   4.   ?    The use of non-financial performance measures helps to address the deficiencies of measurements such as Return on Investment (ROI).

9. Which one of the following statements about the ‘balanced scorecard’ is correct?
   The balanced scorecard:

   1.   ?    Is used only by aeroplane manufacturers.
   2.   ?    Is an interesting theoretical idea that has never taken off in practice.
   3.   ?    Has been widely adopted in leading US and European companies.
   4.   ?    Is unhelpful because it involves too many separate reports.

10. Which one of the following is NOT a key perspective of the balanced scorecard?

    1.   ?    Internal business perspective
    2.   ?    Financial perspective
    3.   ?    Investment perspective
    4.   ?    Customer perspective