Explain or Discuss questions with answers

Question 1

Benefits of Production Budgets

Answer 1

Ensure production team plan for the future and have correct levels of resources, motivates and helps manage production,

Question 2

Benefits of Labour Budgets

Answer 2

Ensure the production team plan for the future and have the correct levels of staff, be used for the cash budget for cash flow forecasting, helps manage and motivate production.

Question 3

Benefits of Profit and Loss Budget

Answer 3

Motivate divisional and organisational senior managers, be used to obtain finance or generate profit forecasts,

Question 4

Benefits of the Cash Budget

Answer 4

Be used to obtain finance, Vital feedforward of control to ensure the business has cash available

Question 5

Benefits of issuing a rights issue compared to acquiring debt or issuing additional shares.

Answer 5

Retains ownership, rewards current shareholders, prevents negative attention towards the company, low admin costs.
Acquiring debt can increase financial risk, have to pay regular interest payments, risk to default
Issuing new shares gives negative press on the financial performance of the business, high admin costs, dilution of ownership.

Question 6

How can Activity-based costing improve profitability

Answer 6

More accurate product costing, identifies high-cost activities, improved pricing decisions, supports strategic decision-making

Question 7

Advantages of Issuing more shares in the business

Answer 7

No repayment obligation, no interest payments, improved debt-to-equity ratio

Question 8

Advantages of acquiring more debt in the business

Answer 8

Ownership is retained, tax-deductible interest, lower cost of capital

Question 9

How performance measurement systems helps a business meet its objectives

Answer 9

Aligns activities with strategic goals, enables informed decision making, improves operational efficiency, motivates and engages employees

Question 10

A measure from the each of the three non-financial balanced scorecard perspectives which would
help a business meet its mission.

Answer 10

1. Customer Perspective - Customer satisfaction score (via surveys or reviews)
2. Internal Business Process Perspective - Order fulfilment time (or production cycle time)
3. Learning and Growth Perspective -Employee training hours per year

Question 11

Benefits a business can gain by managing their environmental impact

Answer 11

Improved brand reputation and customer loyalty, cost savings through efficiency, compliance and reduced legal risks, access to green funding and investment

Question 12

Explain why a business might benefit from using the balanced scorecard to measure and manage organisational performance

Answer 12

Balanced decision-making across all areas of the business, improves strategic focus and aligns departments with overall mission and vision, encourages transparency and responsibility throughout the business, enables agility and adaptability in a competitive environment, supports sustainable growth and innovation