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SMA M2 – Module Quiz 2 (Parts C & D)

YOU SCORED 6 OUT OF A POSSIBLE 8 [75%]

Question 1 Marks: 1
Senior management have requested information about a competitors latest product offering, and have asked for a recommendation if the organisation should
launch something similar.

How would you classify the requested information?

Answer Options
You answered A. The correct answer is A
USER SELECTION CORRECT ANSWER

A Strategic

B Tactical

C Operational

D Financial

Answer Explanation

A is correct because there are several things that indicate this information is strategic in nature. Firstly, new product development is forward looking. It is
looking at future opportunities rather than day-to-day information about the business in it's current format. Also, information for senior management is often
(but not always) in relation to strategic matters.

Module: 2 > Part: C > Differing levels of information in the organisation > Strategic information > Page: 72

Question 2 Marks: 1
What is the performance management approach in relation to strategy implementation?

Answer Options
You answered C. The correct answer is C
USER SELECTION CORRECT ANSWER

A The downward flow of financial budgets through to lower level organisational units.

B The upward flow of transactional data through the management accounting system.

C Measuring the achievement of strategic priorities using non-financial information, such as efficiency measures.

D Measuring the achievement of strategic priorities using financial information, such as sales and expenditure analysis.

Answer Explanation

C is correct because the performance measurement approach is the consideration of non-financial measures, such as operational performance and
efficiency.

Module: 2 > Part: C > Differing levels of information in the organisation > Strategic information > Page: 76-77

Question 3 Marks: 1
What is the purpose of a preliminary assessment in the context of upgrading or replacing a management accounting system?

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Answer Options
You answered B. The correct answer is B
USER SELECTION CORRECT ANSWER

A To assess the information requirements of current stakeholders.

B To determine the adequacy of the current system and processes for current stakeholders.

C To map features of the existing system to the proposed replacement.

D To understand what information stakeholders are currently receiving, and highlight any information that is unused.

Answer Explanation

B is correct because the preliminary assessment seeks to understand the current information needs and processes of the business. It will consider what
works well, what doesn't work well, and what improvements can be made.

A is incorrect because requirements gathering is less focussed on the current state of play. This step would commence when a course of action is
determined (eg, updating the system, or replacing it).

C is incorrect because at the preliminary assessment stage, the course of action is still not finalised. A decision might be made to enhance the current
system, and therefore no replacement exists.

D is incorrect because whilst this is a valid thing for a management accountant to consider, it does not relate to the preliminary assessment phase.

Module: 2 > Part: D > Making a preliminary assessment > Page: 83

Question 4 Marks: 1
Meg is the management accountant for a small magazine publisher. The organisation is considering the implementation of an ERP, replacing multiple systems
and spreadsheets that have been used for management reporting purposes.

When evaluating the project, what intangible benefits might be real, but difficult for Meg to quantify?

Answer Options
You answered D. The correct answer is D
USER SELECTION CORRECT ANSWER

A Reduced staff turnover

B Less refunds for dissatisfied customers

C A higher retention rate of magazine subscribers

D Improved stakeholder relationships between Finance staff and senior management

Answer Explanation

D is correct because staff turnover, refund levels and subscription retention rates are all items that can be measured quite easily.

Improved relationships might be a genuine benefit of having better information, but it is intangible, as there is no real way to measure it. It's also subjective,
as different individuals might not agree on whether working relationships have improved.

Module: 2 > Part: D > Analysising new and existing information systems > Feasibility and criteria for a new information
system > Page: 92

Question 5 Marks: 1
Amazon captures information on every transaction such as customer, purchase time, and products purchased.

What type of information is this classified as?

Answer Options

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You answered C. The correct answer is C

USER SELECTION CORRECT ANSWER

A Tactical Information

B Strategic Information

C Operational Information

D Organisational Information

Answer Explanation

C is correct because operational information is produced from the day-to-day activities of the business, including sales transactions.

Module: 2 > Part: C > Differing levels of information in the organisation > Operational information > Page: 74

Question 6 Marks: 1
WeBuildOffices Pty Ltd (WeBuildOffices) is a construction organisation that undertakes projects that take an average of 18 to 30 months to complete.
Riccardo Mancini, the management accountant at WeBuildOffices, has been asked to recommend a suitable enterprise resource planning (ERP) system.

Which of the following shows the first steps that Riccardo should take to inform his recommendation?

Answer Options
You answered A. The correct answer is A
USER SELECTION CORRECT ANSWER

Assess the adequacy of the current systems, the needs of stakeholders and whether any foreseeable changes to the business will require a
A
different software package.

Establish what functions the ERP software can perform, the cost of purchase and installation, and which is the cheapest available software
B
package the business can afford.

Ask managers whether the capture of real-time information will provide them with too much information and whether the organisation should
C
consider business intelligence or data warehouse software instead.

Recommend to senior managers and the board that they consider engaging a consultant who has expertise in ERP who will be able to obtain
D
savings that offset the costs.

Answer Explanation

A is correct because it begins by assessing the current state of the systems, which includes how well they are providing information and whether the way
they share information is adequate.

B is incorrect because the functions performed by an ERP software package are generally well understood, and this puts buying the software ahead of
determining information needs.

C is incorrect because this focuses only on excess information and implies there is a solution by buying another kind of software package (that will perform
analysis of data) rather than establishing information needs.

D is incorrect because this outsources establishing information needs. It is unlikely that a specialist can make sufficient savings to offset the cost of engaging
them. In any case, it assumes that the software will be purchased.

Module: 2 > Part: D > Upgrading or replacing information systems > Making a preliminary assessment > Page: 83

Question 7 Marks: 0
EverydayProducts Pty Ltd (EverydayProducts) is owned by shareholders and is publicly listed on the stock exchange. Senior managers at EverydayProducts
complain to Sarah Jones, the management accountant, that the reports they receive do not help them to make decisions in the best interests of the
organisation.

Which of the following would be the best course of action for Sarah to improve the reports for senior management?

Answer Options

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You answered D. The correct answer is C

USER SELECTION CORRECT ANSWER

A Conduct individual interviews with managers who say they receive too little information for their operational, tactical and strategic decisions.

B Create a survey to find out what information for managers’ operational, tactical and strategic decisions is unnecessary or excessive.

Meet with managers to discuss the critical success factors (CSFs) associated with their role and responsibilities and validate these through
C
discussion with subordinates.

D Observe managers making decisions to discover the information flows and use made of the information.

Answer Explanation

C is correct because in the ideal world the information used by managers in making their decisions can be discovered by investigating what CSFs have been
defined for their specific role and responsibilities.

A is incorrect because this requires some preliminary work to identify those managers who believe they are receiving too little information and this does not
necessarily align with their specific important decisions.

B is incorrect because a survey may not be accurately and completely completed by managers, particularly if it is administered at a busy time (e.g. in the
lead-up to Christmas or when there is a backlog of customer orders).

D is incorrect because observing managers is very time-consuming and will require checking with other managers who are the providers and recipients of
the manager’s information.

Module: 2 > Part: D > Upgrading or replacing information systems > The life cycle of systems > Page: 89

Question 8 Marks: 0
Online Mall Pty Ltd (Online Mall) is preparing to set up a virtual department store. It will offer customers a discount when buying online. It is proposing to
modify its existing bricks-and-mortar store system by adding an online web browser interface. Details of all transactions will be transferred to its accounting
information system (AIS) to produce profit reports.

Which of the following alternative recommendations is most appropriate for Online Mall’s management accountant to forward to management?

Answer Options
You answered C. The correct answer is D
USER SELECTION CORRECT ANSWER

Obtain legal advice on asking customers for personal information, to ensure that Online Mall’s AIS records contain personal information that is
A
correct.

B Submit a budget for the new hardware, software and communications technologies for the new systems.

Create a prototype that uses low-cost data capture analysis, using macros in a spreadsheet program to obtain simple profiles of product sales
C
and customer buying preferences that go beyond inventory management.

Investigate the information needs of key stakeholders. This investigation forms part of the Initiation and proposal Feasibility Analysis based on the
D
likelihood that the technology to do the data capture will be outsourced, which would be a new strategy for Online Mall.

Answer Explanation

D is correct because the type of information system proposed is quite new to Online Mall, and therefore investigating information needs by stakeholder will
be a more manageable project.

A is incorrect because obtaining legal advice does not finish the work required.

B is incorrect because preparing a budget cannot occur until needs have been adequately established.

C is incorrect because creating a prototype or pilot cannot be representative of Online Mall’s information needs because those needs are not fully
understood. Some would say that a prototype can help establish those needs but the theory of cognitive bias suggests that attention is ‘anchored’ or
focused instead of being widely spread.

Module: 2 > Part: D > Upgrading or replacing information systems > The life cycle of systems > Page: 89

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