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Dear Mr Moffat
I have two questions which answer provided are not fully clear to me. Could you please help?
Question 1:
There are two statement about performance management:
a) They should be measure in financial terms
b) They should be measure factors over which the relevant manager has controlWhich of the statement is true
Both statement
Neither statement
Statement 2
Statement 1My answer was “Both statement” as I have included in the Performance management the RI and ROI however the correct asnwer is Statement 2. Could yo please help?
Question 2
The following statements have been made in relation to the concept of throughput accounting:
Inventory level should be kept at minimun
All machine within the factory should be 100% efficient no idle timeWhich of the above statement is correct
My answer was neither I or II for below reason.
JIT is one of the main concept of the throughput accounting
the asnwer provided in the test is only I.
Could you please help
Thanks and Regards
Gabriella
Question 1:
RI and ROI are only relevant for divisional performance.
For performance management in general, managers should be measured on all sorts of factors – not just financial factors. For example, suppose you were a manager of a teaching company. You should be measured on how good your pass rates are (as well as other thing). This is not a financial measure.
Question 2:
Because throughput accounting assumes that the only truly variable cost is materials, it automatically assumes that we are keeping very low inventories. It is because we assume in throughput accounting that the materials purchases go up and down with the sales. If we were keeping inventories then this would not be the case.
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