Question 1

For each of the following industry-specific KPIs indicate whether it is a financial, customer, internal process or learning and growth perspective.

Accepted Answer

The answer of For each of the following industry-specific KPIs...

Question 2

Which of the following factors under management's control distinguishes an investment centre from a profit centre?

Accepted Answer

Investment in assets is a factor under management's control that distinguishes an investment centre from a profit centre. An investment centre is a unit of an organization that has control over both its revenue and expenses as well as the assets it uses to generate profits. On the other hand, a profit centre is a unit of an organization that is responsible only for generating profits, typically through the sale of goods or services. Therefore, the level of investment in assets is a key driver of performance for an investment centre, as it affects the unit's ability to generate future profits.

Question 3

Which of the following examples would not normally be considered a strategic KPI?

Accepted Answer

Comparing actual to budgeted sales is more of an operational KPI rather than a strategic one. Strategic KPIs are typically focused on long-term goals and objectives, such as investment in capital, levels of debt for funding assets, and budget allocations for research and development, rather than short-term performance metrics like sales comparisons.

Question 4

The store manager of the Red Shoe has asked the store's staff to make a record of customer requests for stock that is unavailable. Determining the percentage of stock that is unavailable when customers ask for it would normally be considered to be a:

Accepted Answer

Determining the percentage of stock that is unavailable when customers ask for it relates to the processes and the customer perspective. This information can help identify opportunities to improve the supply chain and inventory management processes to better meet customer needs.

Question 5

The Demons fast food outlet provides intensive training for new staff, and ongoing training for existing staff. A focus of the ongoing training is to improve customer satisfaction. The training is considered to be a:

Accepted Answer

The training provided to new and existing staff to improve customer satisfaction is focused on the learning and growth perspective, which aims to enhance the skills and capabilities of employees to achieve better outcomes for the organization.

Question 6

An objective or outcome of performance assessment in an organisation is not to:

Accepted Answer

The outcome of performance assessment is not to understand the goals of a manager, but rather to evaluate and improve the performance of individuals, teams, and departments within the organization. Understanding the goals of a manager may be a byproduct of the assessment process, but it is not a primary objective. The primary objectives are to reward good performance, encourage behavior consistent with the entity's goals, and provide feedback on each center's contribution to the achievement of those goals.

Question 7

Over the past two years, the Orange Bank has closed numerous country branches and significantly reduced staff numbers. In the same period, the bank has posted record profits and paid its top executives significant salary increases. However, the bank has also received a significant increase in customer complaints. In an attempt to redress the situation, the bank has decided to improve its image, and one major focus is to determine the average waiting time for calls to be answered. Which of the following would best describe this KPI?

Accepted Answer

The answer of Over the past two years, the Orange...

Question 8

The Friendly Bank has been offering online banking facilities for several months, and wants to determine whether customer usage has increased over the period since the inception of the facilities. Which of the following KPIs would be the most appropriate to achieve the bank's outcome?

Accepted Answer

Sessions per active online customer would be the most appropriate KPI to determine whether customer usage of online banking facilities has increased over time. This KPI would measure how frequently customers are using the online banking facilities, and can be compared over time to see if there is an increase in usage. Site response time is important for user experience but does not directly measure customer usage. Profit per customer and percentage decrease of in-house banking are also not directly related to measuring customer usage of online banking facilities.

Question 9

Benefits of the balanced scorecard include:

Accepted Answer

The answer of Benefits of the balanced scorecard include: 
...

Question 10

The finance director of AKP Ltd has observed that outstanding debtors have significantly increased in the past two months. An examination of possible causes has determined that part of the problem may be the new computerised invoicing system, which, due to input errors, has sent a number of accounts to wrong addresses. The director has asked the credit department to determine how many accounts have been sent to wrong addresses. This indicator would be classified as:

Accepted Answer

The indicator of how many accounts have been sent to wrong addresses is operational because it measures a specific aspect of the company's operations (the invoicing system) and it is a driver because it can be used to identify and address the root cause of the increase in outstanding debtors. It is not classified as strategic because it does not relate to the company's broader goals and it is not classified as an outcome because it measures a specific process rather than a broader result.

Question 11

Of the following statements regarding strengths and weaknesses of measures, which statement does not apply to non-financial measures?

Accepted Answer

The answer of Of the following statements regarding strengths and...

Question 12

The Petrol House service station has introduced a balanced scorecard. The company wants to measure the amount of repeat business from customers. Which of the following measures would be most representative of this objective?

Accepted Answer

The percentage of a day's sales to new versus existing customers would be most representative of measuring repeat business from customers. This measure compares the amount of sales from existing customers to the amount of sales from new customers, giving insight into how many customers are returning to the service station for multiple purchases. Profit per new customer and profit per existing customer do not give insight into whether customers are returning or not, and the percentage of a day's sales per customer does not differentiate between new and existing customers.

Question 13

Which of the following statements regarding performance assessment is incorrect?

Accepted Answer

Measures should focus on areas over which a manager has control or influence over the outcome, not areas outside their capacity to influence.

Question 14

The Orange Bank measures each business unit's contribution to the bank's total revenue on a monthly basis. Which of the following classifications would best describe this KPI?

Accepted Answer

The answer of The Orange Bank measures each business unit's...

Question 15

In assessing the performance of a manager of a profit centre, which of the following would be an appropriate measure?

Accepted Answer

All of the options listed are appropriate measures for assessing the performance of a manager of a profit center. Net profit margin gives insight into how efficiently the profit center is being managed relative to its revenue. Income from operations focuses on the core business activities, excluding non-operating income and expenses. Comparing the center's budget with actual performance helps in understanding how well the manager is adhering to financial plans and controlling costs.

Question 16

The Big Bed Furniture chain has identified as one of its major KPIs the average number of items bought per customer visit. In identifying this KPI, which of the following perspectives is Big Bed most likely to be targeting?

Accepted Answer

The average number of items bought per customer visit is a customer perspective KPI as it pertains directly to the behavior and satisfaction of the customer.

Question 17

Fast Forward Pty Ltd. has been expanding into new markets in recent months. The CEO wishes to know what the sales revenue is from these new markets. This KPI is considered to be a:

Accepted Answer

Sales revenue is a financial metric, so it falls under the financial perspective of the Balanced Scorecard framework.

Question 18

Which of the following would not be categorised as an outcome KPI?

Accepted Answer

Implementing staff training to increase output is a performance KPI, not an outcome KPI, as it measures the progress toward achieving a specific goal rather than the actual achievement of that goal. The other options are all outcome KPIs, as they measure the actual results achieved.

Question 19

In asking the question 'What do we need to do within the core processes of our business in order to develop our employees?' an entity is looking at which main perspective of a balanced scorecard system?

Accepted Answer

The question is asking about developing employees, which falls under the learning and growth perspective of a balanced scorecard system. This perspective focuses on the learning, growth, and development of employees, as well as the organization's culture and core competencies.

Question 20

A business introduced employee training for all production staff, and discovered that product quality improved, which resulted in an increase in sales and ultimately profit. Based on this information, which of the following statements would be the least correct?

Accepted Answer

While increased sales did contribute to the increased profits, it is not the primary reason for the improvement. The main driver was the improved product quality resulting from employee training, making choice C the least correct. Choices A, B, and D are all correct as employee training is an example of a learning and growth perspective, improved product quality is an example of an internal process perspective, and increased sales and profits are outcomes of improved employee skills.

Quiz 13: Performance Measurement and the Balanced Scorecard