Performance Management MCQ Quiz in বাংলা - Objective Question with Answer for Performance Management - বিনামূল্যে ডাউনলোড করুন [PDF]
Last updated on Apr 11, 2025
Latest Performance Management MCQ Objective Questions
Top Performance Management MCQ Objective Questions
Performance Management Question 1:
The finance function of Bagnall Co has been asked to oversee the production of the company’s budgets for the forthcoming year. In its initial instructions to the company’s various divisions the finance function has stressed that once budgets for next year have been formally agreed steps will be taken to maintain their ongoing relevance by undertaking a monthly review of budgets for forthcoming months in the light of performance in earlier months.
Which of the following best describes this approach to budgeting?
Answer (Detailed Solution Below)
Performance Management Question 1 Detailed Solution
The correct option is option 4.
Additional information:
Rolling budgeting means that as each month goes by, the budgets for the months ahead are reviewed and, if necessary, revised so that they remain relevant for the remainder of the budget period.
Performance Management Question 2:
Bright Co produces quarterly rolling budgets and had forecast the costs of material purchases for the next four quarters (Q1, Q2, Q3 and Q4). Purchases for Q1 were budgeted to be $220,000 and it was anticipated that the cost of materials would rise at a rate of 2% per quarter.
At the end of Q1:
- Actual material purchases were recorded at $210,000. This was due to a change of material supplier during the quarter.
- A revised estimate for the increase in material purchase costs was made. The rise was now predicted to be only 1% per quarter.
- The budget was updated.
What estimate for total annual material purchases should be recorded in the updated budget?
Answer (Detailed Solution Below)
Performance Management Question 2 Detailed Solution
The correct option is option 2.
Additional information:
When using rolling budgets, two things happen at the end of an accounting period (month or quarter):
- the remaining budget for the year is updated based on the actual results and the up to date information available, and
- a further accounting period (month or quarter) is added.
In this way there will always be a full year’s budget available.
WORKING
The total annual material purchases will be the sum of the next four quarters (i.e. Y1 Q2, Q3 and Q4) plus the first quarter of the following year (Y2 Q1). The budgets for these quarters will have been updated based on the actual material purchases from Q1 ($210,000) and the predicted cost increase of 1%.
| Y1 Q1 | Y1 Q2 | Y1 Q3 | Y1 Q4 | Y2 Q1 | |
| Actual | Budget | Budget | Budget | Budget | |
| Material purchases | $210,000 | $212,100 | $214,221 | $216,363 | $218,527 |
The total annual material purchases figure in the updated rolling budget would therefore be $212,100 + $214,221 + $216,363 + $218,527 = $861,211
Performance Management Question 3:
The following statements have been made about changing budgetary systems:
- The costs of implementation may outweigh the benefits
- Employees will always welcome any new system which improves planning and control within the organisation
Which of the above statements is/are true?
Answer (Detailed Solution Below)
Performance Management Question 3 Detailed Solution
The correct option is option 1.
Additional information:
(1) is true as it is possible that the costs of a new budgetary system may outweigh the benefits. (2) is not true. Employees are likely to resist new budgetary systems as they may involve additional work, and may be viewed as managers trying to achieve greater control.
Performance Management Question 4:
The following statements have been made about zero based budgeting:
- Employees will focus on eliminating wasteful expenditure
- Short-term benefits could be emphasised over long-term benefits
Which of the above statements is/are true?
Answer (Detailed Solution Below)
Performance Management Question 4 Detailed Solution
The correct option is option 4.
Additional information:
(1) is true – ZBB focusses on only including costs relating to activities that the organisation wishes to continue to perform. Costs will not be included in the budget simply because they were in previous years’ budgets.
(2) is true. Budgets are mainly financial, and management may focus on increasing budgeted profits by removing expenses on activities that may benefit the organisation in the longer term.
Performance Management Question 5:
Tree Co is considering employing a sales manager. Market research has shown that a good sales manager can increase profit by 30%, an average one by 20% and a poor one by 10%. Experience has shown that the company has attracted a good sales manager 35% of the time, an average one 45% of the time and a poor one 20% of the time.
The company’s normal profits are $180,000 per year and the sales manager’s salary would be $40,000 per year.
Based on the expected value criterion, which of the following represents the correct advice which Tree Co should be given?
Answer (Detailed Solution Below)
Performance Management Question 5 Detailed Solution
The correct option is option 1.
Additional information:
New profit figures before salary paid:
Good manager: $180,000 × 1.3 = $234,000
Average manager: $180,000 × 1.2 = $216,000
Poor manager: $180,000 × 1.1 = $198,000
EV of profits = (0.35 × $234,000) + (0.45 × $216,000) + (0.2 × $198,000) = $81,900 + $97,200 + $39,600 = $218,700
Deduct salary cost and EV with manager = $178,700
Therefore, do not employ manager as profits will fall by $1,300.
Performance Management Question 6:
A company is considering whether to develop and market a new product. The cost of developing the product is estimated to be $150,000. There is a 70% probability that the development will succeed and a 30% probability that the development will be unsuccessful.
If the development is successful, the product will be marketed. There is a 50% chance that the marketing will be very successful and the product will make a profit of $250,000. There is a 30% chance that the marketing will be reasonably successful and the product will make a profit of $150,000 and a 20% chance that the marketing will be unsuccessful and the product will make a loss of $80,000. These profit and loss amounts take account of the $150,000 development cost.
What is the expected value of the decision to develop and market the product?
Answer (Detailed Solution Below)
Performance Management Question 6 Detailed Solution
The correct option is option 3.
Additional information:
The following decision tree shows all profit and loss outcomes after deducting the $150,000 development costs:
EVB = 154,000 ((250,000 × 50%) + (150,000 × 30%) + (−80,000 × 20%))
EVA = (154,000 × 70%) + (−150,000 × 30%) = 62,800
Therefore the EV of the decision to market the product is $62,800.
Performance Management Question 7:
FP can choose from three mutually exclusive projects. The net cash flows from the projects will depend on market demand. All of the projects will last for only one year. The forecast net cash flows and their associated probabilities are given below:
| Market demand | Weak | Average | Good |
| Probability | 0.30 | 0.50 | 0.20 |
| Project A | 400 | 500 | 600 |
| Project B | 300 | 350 | 400 |
| Project C | 500 | 450 | 650 |
FP can commission a forecast that would tell it with certainty what demand conditions will be before the decision is made about which project to invest in.
What is the maximum amount that FP should pay for the forecast?
Answer (Detailed Solution Below)
Performance Management Question 7 Detailed Solution
The correct option is option 3.
Tutorial note: The maximum amount that FP should pay is equal to the value of perfect information. This is the expected value (EV) with perfect information less EV without information.
Additional information:
EV without information
Project A ($400 × 0.3) + ($500 × 0.5) + ($600 × 0.2) = $490
Project B ($300 × 0.3) + ($350 × 0.5) + ($400 × 0.2) = $345
Project C ($500 × 0.3) + ($450 × 0.5) + ($650 × 0.2) = $505
Therefore, without perfect information, Project C would be chosen, as it has the highest EV, $505.
EV with perfect information
| If forecast predicts | Choose | Outcome | Probability |
| Weak demand | Project C | 500 | 0.3 |
| Average demand | Project A | 500 | 0.5 |
| Good demand | Project C | 650 | 0.2 |
EV with perfect information is (500 × 0.3) + (500 × 0.5) + (650 × 0.2) = $530
Therefore, value of perfect information is = ($530 − $505) = $25
Performance Management Question 8:
NG is deciding which of four potential venues should be used to stage an entertainment event. Demand for the event may be low, medium or high depending on weather conditions on the day. The management accountant has estimated the contribution that would be earned for each of the possible outcomes and has produced the following regret matrix:
| Regret Matrix | ||||
| Venue | Ayefield | Beefield | Ceefield | Deefield |
| Demand | ||||
| Low | $0 | $200,000 | $300,000 | $450,000 |
| Medium | $330,000 | $110,000 | $0 | $150,000 |
| High | $810,000 | $590,000 | $480,000 | $0 |
If the company applies the minimax regret criterion, which venue would be chosen?
Answer (Detailed Solution Below)
Performance Management Question 8 Detailed Solution
The correct option is option 4.
WORKING
Maximum regret if Ayefield venue is chosen is $ 810,000
Maximum regret if Beefield venue is chosen is $ 590,000
Maximum regret if Ceefield venue is chosen is $ 480,000
Maximum regret if Deefield venue is chosen is $ 450,000
Therefore if NG wants to minimise the maximum regret it should stage the entertainment event at the Deefield venue.
Performance Management Question 9:
The following statements have been made about expected values:
- Expected value is of limited use for decisions regarding outcomes which will be repeated often
- Using expected value in decision-making can lead to the worst possible outcome being ignored
- The reliability of expected value calculations is heavily influenced by the accuracy of the probabilities assigned to outcomes
Which of the statements are correct?
Answer (Detailed Solution Below)
Performance Management Question 9 Detailed Solution
The correct option is option 4.
Additional information:
Expected value is most useful for decisions that are repeated often since the expected value is an average that would be expected if a decision were to be repeated many times, so statement (1) is incorrect.
Performance Management Question 10:
The committee of a new golf club is setting the annual membership fee. The number of members depends on the membership fee charged and economic conditions. The forecast annual cash inflows from membership fees are shown below:
| Membership fee | ||||
| $600 | $800 | $900 | $1,000 | |
| Economic conditions: | ||||
| Low | 360 | 400 | 360 | 320 |
| Average | 480 | 440 | 405 | 380 |
| High | 540 | 480 | 495 | 420 |
Applying the minimax regret criterion, what fee would be set by the committee?
Answer (Detailed Solution Below)
Performance Management Question 10 Detailed Solution
The correct option is option 1.
Additional information:
Table of regrets (opportunity cost):
| Membership fee | ||||
| $600 | $800 | $900 | $1,000 | |
| Economic conditions: | ||||
| Low | 40 | 0 | 40 | 80 |
| Average | 0 | 40 | 75 | 100 |
| High | 0 | 60 | 45 | 120 |
| Maximum regret | 40 | 60 | 75 | 120 |
Therefore, a price of $600 will lead to the lowest maximum regret.