CGA CGA Performance Management & Analytics 1 — Questions and Answers
Question 1: A balanced scorecard measures organizational performance across how many perspectives?
- Two
- Three
- Four (Correct answer)
- Five
Correct answer: Four
Kaplan and Norton's balanced scorecard framework evaluates performance across four perspectives: financial, customer, internal processes, and learning & growth.
Question 2: Which type of variance measures the difference between actual hours worked and standard hours allowed, multiplied by the standard labor rate?
- Labor rate variance
- Labor efficiency variance (Correct answer)
- Labor mix variance
- Labor yield variance
Correct answer: Labor efficiency variance
The labor efficiency variance compares actual hours used to the standard hours that should have been used, valued at the standard rate.
Question 3: What is a key performance indicator (KPI)?
- An annual financial audit result
- A quantifiable measure used to evaluate progress toward critical business objectives (Correct answer)
- A benchmark derived from competitor financial ratios
- A regulatory requirement for public companies
Correct answer: A quantifiable measure used to evaluate progress toward critical business objectives
KPIs are specific, measurable metrics that organizations use to track and assess progress toward defined strategic and operational goals.
Question 4: Which cost concept distinguishes between costs that change with production volume and costs that remain fixed?
- Direct vs. indirect costs
- Product vs. period costs
- Variable vs. fixed costs (Correct answer)
- Standard vs. actual costs
Correct answer: Variable vs. fixed costs
Variable costs change proportionally with output (e.g., direct materials), while fixed costs remain constant regardless of production volume (e.g., rent).
Question 5: A company has a contribution margin ratio of 40% and fixed costs of $200,000. What is the breakeven point in sales dollars?
- $80,000
- $500,000 (Correct answer)
- $333,333
- $280,000
Correct answer: $500,000
Breakeven sales = Fixed costs ÷ Contribution margin ratio = $200,000 ÷ 0.40 = $500,000.
Question 6: What does Economic Value Added (EVA) measure?
- A company's gross profit after taxes
- The value created above and beyond the required return on capital (Correct answer)
- Total shareholder return over a period
- Revenue growth adjusted for inflation
Correct answer: The value created above and beyond the required return on capital
EVA = Net Operating Profit After Tax − (Capital Invested × Cost of Capital), measuring the true economic profit after accounting for the cost of all capital deployed.
CGA CGA Performance Management & Analytics 1
A balanced scorecard measures organizational performance across how many perspectives?