Performance Management MCQ Quiz in తెలుగు - Objective Question with Answer for Performance Management - ముఫ్త్ [PDF] డౌన్లోడ్ కరెన్
Last updated on Apr 6, 2025
Latest Performance Management MCQ Objective Questions
Top Performance Management MCQ Objective Questions
Performance Management Question 1:
A machine owned by a company has been idle for some months but could now be used on a one-year contract which is under consideration. The net book value of the machine is $1,000. If not used on this contract, the machine could be sold now for a net amount of $1,200. After use on the contract, the machine would have no saleable value and the cost of disposing of it in one year’s time would be $800.
What is the total relevant cost of the machine to the contract?
Answer (Detailed Solution Below)
Performance Management Question 1 Detailed Solution
Performance Management Question 2:
Nottingham Co is planning to use three staff members for a special project, but the company needs to calculate whether the project will be profitable.
The full employment costs for the three staff involved in the project, for the life of the project, would be $15,600. The cost of hiring agency staff to cover the work they would normally undertake would be $21,400. Another alternative is for three regular staff to cover the work of the staff involved in the project and to hire new additional staff to cover for these three regular staff at a cost of $18,000.
What is the cost of staff that should be included in the calculation of the profitability of the project?
Answer (Detailed Solution Below)
Performance Management Question 2 Detailed Solution
The correct option is option 3.
Additional information:
There are two options to choose from. Nottingham Co should choose the option with the lowest relevant cost:
Option 1 − hiring agency staff to cover for the three staff who will work on the contract. The relevant cost is the incremental cost − which is the cost of the agency staff, which is $21,400.
Option 2 − three regular staff would cover the work of the staff who will work on the contract, and agency staff will be used to cover their work. The relevant cost is the agency cost of $18,000.
Option 2 has the lowest relevant cost, so would be used. The relevant cost is therefore $18,000.
The full employment costs of the staff who will work on the project are not relevant as these will not change − they will be paid regardless of whether the project goes ahead or not.
Performance Management Question 3:
A company sells its product at $20 per unit in order to achieve its objective of maximising profits. Selling price ($P) is related to quantity sold (Q) by the following equation:
P = 30 − 0.0002Q
Assuming there are no opening or closing inventories, what is the marginal cost of production at the optimum level of output?
Answer (Detailed Solution Below)
Performance Management Question 3 Detailed Solution
The correct option is option 2.
Additional information:
P = 30 − 0.0002Q = 20
Therefore, 10 = 0.0002Q
So Q = 50,000.
MR = 30 − 0.0004Q = 30 − (50,000 × 0.0004) = $10
At optimum output level MC = MR, therefore MC = $10
Performance Management Question 4:
If a 6% fall in price causes a 9% increase in demand for a particular item, what is its price elasticity of demand?
Answer (Detailed Solution Below)
Performance Management Question 4 Detailed Solution
The correct option is option 1.
Additional information:
PED = % change in Q/% change in P = 9%/−6% = −1.5
Although PED is almost invariable negative (due to the “inverse” relationship between price and quantity) it is usually stated without the minus sign. Therefore, more than one is the only appropriate answer.
Performance Management Question 5:
Gemson estimates that at a price of $50 it can sell 2,000 units of its product and at a price of $40 it can sell 2,600 units of the product.
What is the price elasticity of demand, to 2 decimal places, when selling price is $50 and quantity sold is 2,000?
Answer (Detailed Solution Below)
Performance Management Question 5 Detailed Solution
The correct option is option 4.
Additional information:
PED = % change in quantity demanded/% change in price
= [(2,600 − 2,000)/2,000 × 100%]/[(40 − 50)/50 × 100%]
= 30%/20% = 1.50
Note: PED ignores the sign (+/-)
Performance Management Question 6:
Which of the following statements about full cost plus pricing are true?
- It is appropriate when fixed costs are relatively large.
- It is appropriate for long-term pricing.
- It will guarantee a profit is made if the budgeted sales level is achieved.
- It will produce a price similar to what competitors are charging
Answer (Detailed Solution Below)
Performance Management Question 6 Detailed Solution
The correct option is option 3.
Additional information:
Basing a price on cost fails to take into account what competitors are doing
Performance Management Question 7:
Roe sold 2,000 units of a product during the year at a mark-up of 25% on full cost. The selling price was $100 and fixed costs of production were $40,000.
Next year the variable costs of production are expected to increase by 10%. Fixed costs of production and sales quantity are expected to remain unchanged.
What selling price will maintain the mark-up of 25% on full cost?
Answer (Detailed Solution Below)
Performance Management Question 7 Detailed Solution
The correct option is option 2.
Additional information:
Full costs in current year = (2,000 × $100)/125% = $160,000
Of which, Variable costs = $160,000 − $40,000 = $120,000
Next year:
variable costs = $120,000 × 110% = $132,000
Therefore, total costs = $132,000 + $40,000 = $172,000
To maintain 25% mark-up on cost, sales revenue = $172,000 × 1.25 = $215,000
Therefore selling price per unit = $215,000/2,000 = $107.50
Performance Management Question 8:
The selling price (P) of a product is related to the quantity sold (Q) by the following equation:
P = 60 − 0.01Q
The total cost is given by TC = 5,000 + 8Q.
What selling price will maximise profit?
Answer (Detailed Solution Below)
Performance Management Question 8 Detailed Solution
The correct option is option 2.
Additional information:
TC = 5,000 (fixed cost) + 8 (variable cost per unit) Q
Marginal cost (MC) = variable cost = 8
Marginal revenue, is given by MR = a − 2bQ where a = 60 and b = 0.01, so MR = 60 − 0.02Q
Profit is maximised at the point where MR = MC
60 − 0.02Q = 8
Therefore, Q = (60 − 8)/0.02 = 2,600 and P = 60 − 0.01(2,600) = $34
Performance Management Question 9:
Which of the following statements about market skimming pricing are true?
- It is appropriate when the price sensitivity of demand is unknown.
- It is likely to discourage competitors from entering the market.
- It is useful when launching a product into a competitive market.
Answer (Detailed Solution Below)
Performance Management Question 9 Detailed Solution
The correct option is option 1.
Additional information:
Market skimming uses high prices to maximise the unit profit in the early stages of the product life cycle. This is likely to encourage competitors to enter the market, rather than discourage them. Also, if demand is not known, it will be more beneficial to charge high prices and reduce them if demand is insufficient. It is not appropriate when launching a product into a competitive market as the high price would mean customers would buy from other sources.
Performance Management Question 10:
C Co uses material B, which has a current market price of $0.80 per kg. In a linear program, where the objective is to maximise profit, the shadow price of material B is $2 per kg. The following statements have been made:
1. Contribution will be increased by $2 for each additional kg of material B purchased at the current market price
2. The maximum price which should be paid for an additional kg of material B is $2
3. Contribution will be increased by $1.20 for each additional kg of material B purchased at the current market price
4. The maximum price which should be paid for an additional kg of material B is $2.80
Answer (Detailed Solution Below)
Performance Management Question 10 Detailed Solution
The correct option is option 4.
Additional information:
(2) is wrong as it reflects the common misconception that the shadow price is the maximum price which should be paid, rather than the maximum extra over the current purchase price. (3) is wrong but could be thought to be correct if (2) was wrongly assumed to be correct.