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Last Attempt P2 Questions

Page: 5 / 7
Question 20

A goal congruent transfer price will always:

Options:

A.

motivate divisional managers by maximising divisional autonomy.

B.

align the decision making of divisional managers with the objectives of the organization as a whole.

C.

align the decision making of divisional managers with the maximization of divisional profit.

D.

ensure that profits are shared equally between the supplying and receiving divisions.

Question 21

Risk management can be represented as a four step process. The four steps, shown randomly, are:

1. Establish appropriate risk management policies.

2. Risks are identified by key stakeholders.

3. Risks are monitored on an ongoing basis.

4. Risks are evaluated according to the likelihood of occurrence and impact on the organization.

Which of the following is the correct order for the four steps?

Options:

A.

1, 2, 3, 4

B.

2, 1, 4, 3

C.

1, 2, 4, 3

D.

2, 4, 1, 3

Question 22

A company has three divisions, each of which is an investment centre. The divisional managers' performance is assessed using return on investment (ROI). A higher ROI will result in a higher bonus for the divisional manager.

The company's cost of capital is 15%.

For the forthcoming year each divisional manager has one investment opportunity available as follows:

The manager(s) of which division(s) will proceed with their respective investment opportunity?

Options:

A.

Division 1 and Division 3

B.

Division 2 and Division 3

C.

Division 3 only

D.

Division 1 only

Question 23

One aspect of life cycle costing is the recognition of the fact that during the design or development stage a large proportion of many products' life cycle costs are:

Options:

A.

determined

B.

wasted

C.

under absorbed

D.

amortised

Page: 5 / 7
Exam Code: P2
Exam Name: Advanced Management Accounting
Last Update: Apr 29, 2024
Questions: 202
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