Setting Performance Expectations and Metrics

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Questions and Answers

What is the primary purpose of regularly reviewing and updating performance expectations?

  • To increase cost savings
  • To ensure employees are overworked
  • To align with evolving strategic priorities (correct)
  • To reduce employee engagement

What type of metrics provide insights into critical areas not captured by financial measures?

  • Non-Financial Metrics (correct)
  • Financial Metrics
  • Activity-Based Metrics
  • Performance Metrics

What is a key factor to consider when choosing performance metrics?

  • The department's budget
  • The organization's size
  • The industry's benchmarks
  • The individual's role and responsibilities (correct)

What is the primary benefit of using a balanced scorecard approach?

<p>It combines financial and non-financial measures (D)</p>
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What is a key factor in ensuring the reliability of performance evaluations?

<p>Ensuring consistent rating scales and clear criteria (A)</p>
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What is the primary benefit of aligning appraisal criteria with performance expectations?

<p>It enhances the validity of the appraisal (A)</p>
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What is a key characteristic of a goal-oriented approach to performance evaluation?

<p>Aligning individual performance with organizational objectives (C)</p>
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What is the primary challenge of implementing a developmental focus approach to performance evaluation?

<p>It requires a shift in organizational culture and mindset (D)</p>
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What is the term for the phenomenon where a single positive or negative trait influences the overall evaluation of an employee?

<p>Halo/Horn Effect (B)</p>
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What is one strategy for addressing bias in performance evaluation?

<p>Training managers on different types of biases (C)</p>
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What is the purpose of calibration in performance evaluation?

<p>To have managers discuss and compare their ratings to ensure consistency (B)</p>
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Why is it important for management accountants to stay informed about the latest approaches and best practices in performance evaluation?

<p>To improve the effectiveness of performance evaluation (C)</p>
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What is the primary objective of standard costing in performance management?

<p>To identify operational inefficiencies and make data-driven decisions (D)</p>
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What is a limitation of traditional performance appraisal approaches?

<p>They are infrequent and may not capture ongoing performance fluctuations (A)</p>
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Which method of setting standards involves analyzing past data to identify cost trends and patterns?

<p>Historical Analysis (C)</p>
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What is the primary benefit of using a 360-Degree Feedback approach?

<p>It gathers feedback from multiple sources to provide a well-rounded view of performance (C)</p>
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What is the purpose of a Standard Cost Card?

<p>To summarize the standard costs for each element of a product or service (D)</p>
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What is a characteristic of Contemporary Approaches to Performance Appraisal?

<p>They consider a broader range of perspectives and information (A)</p>
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What is an advantage of using participative standard setting?

<p>It ensures buy-in and ownership from employees (B)</p>
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What is the primary focus of Management by Objectives (MBO)?

<p>Setting specific, measurable goals and evaluating performance based on goal achievement (B)</p>
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What is the primary benefit of benchmarking in standard costing?

<p>It provides a comprehensive framework for assessing operational efficiency (C)</p>
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What is the outcome of using standard costing in an organization?

<p>Fair, accurate, and contributing to organizational success (B)</p>
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What is a strength of traditional performance appraisal approaches?

<p>They provide a standardized framework for evaluations (B)</p>
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What is the primary goal of Self-Assessment in performance appraisal?

<p>To promote self-awareness and reflection (A)</p>
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What is the formula for calculating the Materials Quantity Variance (MQV)?

<p>(Actual Quantity - Standard Quantity) x Standard Price (B)</p>
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Which tool is used to visually represent potential causes and their relationships in root cause analysis?

<p>Fishbone diagrams (A)</p>
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What is the purpose of an Action Plan in variance analysis?

<p>To develop detailed plans to address the root causes of variances (C)</p>
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What is the formula for calculating the Labor Rate Variance (LRV)?

<p>(Actual Rate - Standard Rate) x Actual Hours (A)</p>
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What is the purpose of a Performance Dashboard in variance analysis?

<p>To visualize key variances and performance metrics in real-time (A)</p>
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What is the formula for calculating the Variable Overhead Variance (VOV)?

<p>Actual Variable Overhead - (Standard Rate x Actual Activity) (D)</p>
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