APM Strategic management accounting and measurement

ACCA · Strategic Professional · 7 questions

Name: ____________________   Date: ____________

1. Divisional profit is $500,000, capital employed is $3,000,000 and the cost of capital is 12 percent. The residual income is:

   • A $360,000
   • B $500,000
   • C $860,000
   • D $140,000

2. Divisional profit is $500,000, capital employed is $3,000,000 and the cost of capital is 12 percent. The return on investment of the division is:

   • A 12.0%
   • B 28.0%
   • C 16.7%
   • D 6.0%

3. Net operating profit after tax is $12m, capital employed is $80m and the cost of capital is 9 percent. Economic value added is:

   • A $2.4m
   • B $7.2m
   • C $12.0m
   • D $4.8m

4. A weakness of ROI as a divisional measure is that it can:

   • A Be calculated only for listed companies
   • B Ignore the size of the division
   • C Ignore profit
   • D Lead managers to reject projects that earn more than the cost of capital but less than the current ROI

5. The four perspectives of the balanced scorecard are:

   • A Strategic, tactical, operational, technical
   • B Financial, customer, internal business process, and innovation and learning
   • C Revenue, cost, profit, asset
   • D Plan, do, check, act

6. The three dimensions of the Building Block model for service businesses are:

   • A Inputs, outputs and outcomes
   • B Dimensions, standards and rewards
   • C Plan, control and review
   • D Quality, cost and time

7. Short-termism in performance measurement arises mainly because:

   • A The budget is too long
   • B The balanced scorecard is used
   • C Managers focus on measures that reward immediate results at the cost of long-term value
   • D Targets are not set