DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO DO SO.
Performance Pillar
19 November 2014 – Wednesday Morning Session Instructions to candidates You are allowed three hours to answer this question paper. You are allowed 20 minutes reading time before the examination begins during which you should read the question paper and, if you wish, highlight and/or make notes on the question paper. However, you will not be allowed, under any circumstances, to open the answer book and start writing or use your calculator during this reading time. You are strongly advised to carefully read ALL the question requirements before attempting the question concerned (that is all parts and/or subquestions). ALL answers must be written in the answer book. Answers written on the question paper will not be submitted for marking. You should show all workings as marks are available for the method you use. ALL QUESTIONS ARE COMPULSORY. Section A comprises 8 sub-questions and is on pages 2 to 5. Section B comprises 6 sub-questions and is on pages 6 to 9. Section C comprises 2 questions and is on pages 10 to 13. Maths tables and formulae are provided on pages 15 to 18. The list of verbs as published in the syllabus is given for reference on page 19. Write your candidate number, the paper number and examination subject title in the spaces provided on the front of the answer book. Also write your contact ID and name in the space provided in the right hand margin and seal to close. Tick the appropriate boxes on the front of the answer book to indicate which questions you have answered.
P1 – Performance Operations
P1 – Performance Operations
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The Chartered Institute of Management Accountants 2014
SECTION A – 20 MARKS [You are advised to spend no longer than 36 minutes on this question.]
ANSWER ALL EIGHT SUB-QUESTIONS IN THIS SECTION
Instructions for answering Section A: The answers to the eight sub-questions in Section A should ALL be written in your answer book. Your answers should be clearly numbered with the sub-question number then ruled off, so that the markers know which sub-question you are answering. For multiple choice questions, you need only write the sub-question number and the letter of the answer option you have chosen. You do not need to start a new page for each subquestion. For sub-questions 1.6 to 1.8 you should show your workings as marks are available for the method you use to answer these sub-questions.
Question One 1.1
The economic order quantity is the order quantity which results in:
A
the lowest cost of ordering inventory.
B
the highest discount from suppliers.
C
the lowest combined total costs of ordering and holding inventory.
D
the lowest cost of holding inventory. (2 marks)
1.2
A decision maker using the maximin decision criterion will:
A
assume that uncertainty can be ignored and will select the option with the highest expected value.
B
assume that he/she will regret not having selected another option and will therefore minimise the possible regret under this assumption.
C
assume that the worst outcome will occur and will select the option that will give the highest return from the worst outcome possible under each option.
D
assume that the best outcome will occur and will select the option that will give the highest return from the best outcome possible under each option. (2 marks)
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1.3
A company uses an activity based costing system. The company manufactures three products, details of which are given below:
Annual production (units) Batch size (units) Number of inspections per batch
Product X 160,000 100 3
Product Y 200,000 50 4
Product Z 100,000 25 6
Annual inspection costs are $150,000. The inspection cost per unit of Product Y is closest to: A
$0.23
B
$0.33
C
$13.39
D
$0.27 (2 marks)
1.4
A company uses a standard costing system. The company’s sales budget for the latest period includes 1,500 units of a product with a selling price of $400 per unit. The product has a budgeted contribution to sales ratio of 30%. Actual sales for the period were 1,630 units at a selling price of $390 per unit. The actual contribution to sales ratio was 28%. The sales volume contribution variance for the product for the latest period is:
A
$15,600 F
B
$52,000 F
C
$14,560 F
D
$14,196 F (2 marks)
1.5
A company’s budget for the next period shows that it would breakeven at sales revenue of $800,000 and fixed costs of $320,000. The sales revenue needed to achieve a profit of $200,000 in the next period would be:
A
$1,000,000
B
$1,300,000
C
$1,320,000
D
$866,667 (2 marks)
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November 2014
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Performance Operations
1.6
A company’s managers are considering investing in a project that has an expected life of five years. The project is expected to generate a positive net present value of $240,000 when cash flows are discounted at 12% per annum. The project’s expected cash flows include a cash inflow of $120,000 in each of the five years. No tax is payable on projects of this type.
Required: Calculate the percentage decrease, to the nearest 0.1%, in the annual cash inflow that would cause the managers to reject the project from a financial perspective. (2 marks)
1.7
A company’s sales revenue for the year just ended was $28 million. The company earned a gross margin of 40% on sales. All sales and purchases were on credit. The following balances have been extracted from the year end accounts: Inventory Accounts receivable Accounts payable
$4 million $6 million $3 million
Required: Calculate, to the nearest day, the company’s cash operating cycle based on the year end figures. (4 marks)
1.8
A company is preparing its annual budget and is estimating the number of units of Product W that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship: y = a + bx where: y = number of sales units in the quarter a = 15,000 b = 3,000 x = the quarter number where 1 = quarter 1 of year 1 Actual sales of Product W in year 1 were affected by seasonal variations and were as follows: Quarter 1: Quarter 2: Quarter 3: Quarter 4:
20,250 units 19,425 units 25,200 units 24,300 units
Required: Calculate the expected unit sales of Product W for each quarter of year 2, after adjusting for seasonal variations using the multiplicative model. (4 marks)
(Total for Section A = 20 marks)
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November 2014
Reminder All answers to Section A must be written in your answer book. Answers to Section A written on the question paper will not be submitted for marking.
End of Section A. Section B begins on page 6
TURN OVER November 2014
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Performance Operations
SECTION B – 30 MARKS [You are advised to spend no longer than 9 minutes on each sub-question in this section.] ANSWER ALL SIX SUB-QUESTIONS. YOU SHOULD SHOW YOUR WORKINGS AS MARKS ARE AVAILABLE FOR THE METHOD YOU USE. Question Two (a)
A company, which operates from a number of different locations, uses a system of centralised purchasing. The directors of the company are considering whether to change to a system of decentralised purchasing.
Required: Explain the benefits that may result from the company using a decentralised purchasing system. (5 marks)
(b)
A company has annual credit sales of $25 million. The company’s credit terms are 30 days from the invoice date but the average settlement period for trade receivables is 60 days. The company is currently reviewing its credit policy. The credit controller has proposed a change to the company’s credit policy as follows: (i) Implement stricter credit control procedures at a cost of $30,000 per year. and (ii) Offer customers a 2.5% discount if they pay within 30 days. It is estimated that, as a result of the proposed change to the credit policy, 60% of customers, by sales value, would pay at the end of the 30 day period. The remainder would take, on average, 50 days to pay. It is not anticipated that the change to the credit policy will result in a reduction in sales revenue. The company finances its trade receivables by a bank overdraft which has an interest rate of 14% per annum.
Required: Calculate the net annual cost if the credit controller’s proposed change to the credit policy is adopted. (5 marks)
Section B continues on the opposite page
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November 2014
(c)
FG is preparing its cash budgets for January, February and March. Budgeted data are as follows: November
December
January
February
Sales (units)
750
800
800
850
900
Production (units)
800
800
850
900
950
$48,000
$48,000
$51,000
$54,000
$56,000
$20,000
$20,000
$20,000
$20,000
$20,000
Direct labour and variable overheads incurred Fixed overheads incurred (excluding depreciation)
March
The selling price per unit is $200. The purchase price per kg of raw material is $25. Each unit of finished product requires 2 kg of raw materials which are purchased on credit in the month before they are used in production. Suppliers of raw materials are paid one month after purchase. All sales are on credit. 80% of customers, by sales value, pay one month after sale and the remainder pay two months after sale. The direct labour cost, variable overheads and fixed overheads are paid in the month in which they are incurred. Machinery costing $100,000 will be delivered in February and paid for in March. Depreciation, including that on the new machinery, is as follows: Machinery and equipment Motor vehicles
$3,500 per month $800 per month
The opening cash balance at 1 January is estimated to be $15,000.
Required: Prepare a cash budget for each of the three months January, February and March. (5 marks)
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November 2014
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Performance Operations
(d)
A company has surplus funds to invest for a period of three months. It is considering two alternative types of investment: Investment 1 Purchase treasury bills issued by the home country’s central bank. Investment 2 Arrange a money market deposit through a bank.
Required: Compare and contrast the two alternative types of investment in terms of their risk, return and liquidity. (5 marks)
The following information is required for sub-questions (e) and (f) The manager of a tourist attraction is considering whether to open on 1 January, a day when the attraction has, in previous years, been closed. The attraction has a daily capacity of 1,000 visitors. If the attraction opens for business on that day it will incur additional specific fixed costs of $30,000. The contribution from the sale of tickets would be $25 per visitor. The number of visitors is uncertain but based on past experience it is expected to be as follows: Probability 50% 30% 20%
800 visitors 900 visitors 1,000 visitors
It is expected that visitors will also purchase souvenirs and refreshments. The contribution which would be made from these sales has been estimated as follows: Probability 35% 40% 25%
$8 per visitor $10 per visitor $12 per visitor
(e)
Calculate whether it is worthwhile opening the tourist attraction on 1 January. You should use expected value as the basis of your analysis. (5 marks)
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November 2014
(f) (i) Prepare a two way data table to show the contribution to general fixed overheads for each of the nine possible outcomes. (3 marks) (ii) Calculate the probability of making a positive contribution to general fixed overheads by opening on 1 January. (2 marks) (Total for sub-question (f) = 5 marks)
(Total for Section B = 30 marks)
End of Section B Section C begins on page 10
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November 2014
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Performance Operations
SECTION C – 50 MARKS [You are advised to spend no longer than 45 minutes on each question in this section.]
ANSWER BOTH QUESTIONS IN THIS SECTION. EACH QUESTION IS WORTH 25 MARKS. YOU SHOULD SHOW YOUR WORKINGS AS MARKS ARE AVAILABLE FOR THE METHOD YOU USE. Question Three A company manufactures and sells a single product. The company operates a standard marginal costing system that enables the reporting of planning and operational variances. The original standard contribution per unit of the product for October, which was used to establish the budgeted contribution for the month, was as follows:
Selling price Direct material Direct labour Contribution
1.5 kg @ $10 per kg 2 hours @ $15 per hour
$ 60 (15) (30) 15
Other information for October •
Sales and production quantities: Budgeted sales and production Actual sales and production
40,000 units 42,000 units
•
A change in the product specification was implemented at the start of October which required 20% additional material for each unit. The standard cost shown above was not revised to reflect this change.
•
Actual direct material purchased and used was 78,000 kg at $9.90 per kg.
•
The labour rate shown in the standard cost above was over estimated. The correct standard labour rate for the grade of labour required was $14.60 per hour. The actual rate paid was $15.20 per hour and actual hours worked were 86,000 hours.
•
The actual selling price per unit was $62.
•
There was no opening inventory of raw materials or finished goods.
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November 2014
Required: (a)
Prepare a statement for October that reconciles the budgeted contribution with the actual contribution. Your statement should show the variances in as much detail as possible. (13 marks)
(b)
Discuss the performance of the company for October. Your discussion should give one possible reason for each of the operational variances calculated in part (a). (6 marks)
(c)
Explain why separating variances into their planning and operational elements should improve performance management. (6 marks)
(Total for Question Three = 25 marks)
Section C continues on the next page
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November 2014
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Performance Operations
Question Four ST operates in a highly competitive market and is considering introducing a new product to expand its current range. The new product will require the purchase of a specialised machine costing $825,000. The machine has a useful life of four years and is expected to have a scrap value at the end of Year 4 of $45,000. The company uses the straight line method of depreciation. The machine would be used exclusively for the new product. Due to a shortage of space in the factory, investment in the new machine would necessitate the disposal, for $23,000, of an existing machine which has a net book value of $34,000. This machine, if retained for a further year, would have earned a contribution of $90,000 before being scrapped for nil value. The machine had a zero tax written down value and therefore there will be no effect on tax depreciation arising from the disposal of the machine. The company employed the services of a consultant, at a cost of $29,000, to determine the demand for the new product. The consultant’s estimated demand is given below: Year 1 Year 2 Year 3 Year 4
18,000 units 24,000 units 26,000 units 22,000 units
The new product is expected to earn a contribution of $30 per unit. Fixed costs of $380,000 per annum, including depreciation of the new machine, will arise as a direct result of the manufacture of the new product.
Taxation ST’s Financial Director has provided the following taxation information: • • •
Tax depreciation: 25% per annum of the reducing balance, with a balancing adjustment in the year of disposal. Taxation rate: 30% of taxable profits. Half of the tax is payable in the year in which it arises, the balance is paid in the following year. ST has sufficient taxable profits from other parts of its business to enable the offset of any pre-tax losses on this project.
Other information A cost of capital of 12% per annum is used to evaluate projects of this type. Ignore inflation.
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November 2014
Required: (a) Evaluate whether ST should introduce the new product. You should use net present value (NPV) as the basis of your evaluation. (14 marks)
A company is deciding which of two alternative machines (X and Y) to purchase. The useful lives for machines X and Y are two years and three years respectively. The cash flows associated with each of the machines are given in the table below: Year
0
1
2
3
$000
$000
$000
$000
Machine X
(200)
200
230
Machine Y
(240)
200
230
240
Each of the machines would be replaced at the end of its useful life by an identical machine. You should assume that the cash flows for the future replacements of machines X and Y are the same as those in the table above. The company’s cost of capital is 12% per annum.
Required: (b) Calculate, using the annualised equivalent method, whether the company should purchase machine X or machine Y. (5 marks)
(c) Explain the limitations of using the annualised equivalent method when making investment decisions. (6 marks) (Total for Question Four = 25 marks)
(Total for Section C = 50 marks)
End of question paper Maths tables and formulae are on pages 15 to 18
November 2014
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November 2014
PRESENT VALUE TABLE Present value of $1, that is (1+ r ) payment or receipt.
−n
where r = interest rate; n = number of periods until
Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820
2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673
3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554
4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 0.456
Interest rates (r) 5% 6% 0.952 0.943 0.907 0.890 0.864 0.840 0.823 0.792 0.784 0.747 0.746 0.705 0.711 0.665 0.677 0.627 0.645 0.592 0.614 0.558 0.585 0.527 0.557 0.497 0.530 0.469 0.505 0.442 0.481 0.417 0.458 0.394 0.436 0.371 0.416 0.350 0.396 0.331 0.377 0.312
7% 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 0.362 0.339 0.317 0.296 0.277 0.258
8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0.232 0.215
9% 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0.275 0.252 0.231 0.212 0.194 0.178
10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149
Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
11% 0.901 0.812 0.731 0.659 0.593 0.535 0.482 0.434 0.391 0.352 0.317 0.286 0.258 0.232 0.209 0.188 0.170 0.153 0.138 0.124
12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104
13% 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295 0.261 0.231 0.204 0.181 0.160 0.141 0.125 0.111 0.098 0.087
14% 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.073
Interest rates (r) 15% 16% 0.870 0.862 0.756 0.743 0.658 0.641 0.572 0.552 0.497 0.476 0.432 0.410 0.376 0.354 0.327 0.305 0.284 0.263 0.247 0.227 0.215 0.195 0.187 0.168 0.163 0.145 0.141 0.125 0.123 0.108 0.107 0.093 0.093 0.080 0.081 0.069 0.070 0.060 0.061 0.051
17% 0.855 0.731 0.624 0.534 0.456 0.390 0.333 0.285 0.243 0.208 0.178 0.152 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.043
18% 0.847 0.718 0.609 0.516 0.437 0.370 0.314 0.266 0.225 0.191 0.162 0.137 0.116 0.099 0.084 0.071 0.060 0.051 0.043 0.037
19% 0.840 0.706 0.593 0.499 0.419 0.352 0.296 0.249 0.209 0.176 0.148 0.124 0.104 0.088 0.079 0.062 0.052 0.044 0.037 0.031
20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 0.135 0.112 0.093 0.078 0.065 0.054 0.045 0.038 0.031 0.026
November 2014
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Performance Operations
Cumulative present value of $1 per annum, Receivable or Payable at the end of each year for n years
1− (1+ r ) − n r
Periods (n) 1 2 3 4 5
1% 0.990 1.970 2.941 3.902 4.853
2% 0.980 1.942 2.884 3.808 4.713
3% 0.971 1.913 2.829 3.717 4.580
4% 0.962 1.886 2.775 3.630 4.452
Interest rates (r) 5% 6% 0.952 0.943 1.859 1.833 2.723 2.673 3.546 3.465 4.329 4.212
7% 0.935 1.808 2.624 3.387 4.100
8% 0.926 1.783 2.577 3.312 3.993
9% 0.917 1.759 2.531 3.240 3.890
10% 0.909 1.736 2.487 3.170 3.791
6 7 8 9 10
5.795 6.728 7.652 8.566 9.471
5.601 6.472 7.325 8.162 8.983
5.417 6.230 7.020 7.786 8.530
5.242 6.002 6.733 7.435 8.111
5.076 5.786 6.463 7.108 7.722
4.917 5.582 6.210 6.802 7.360
4.767 5.389 5.971 6.515 7.024
4.623 5.206 5.747 6.247 6.710
4.486 5.033 5.535 5.995 6.418
4.355 4.868 5.335 5.759 6.145
11 12 13 14 15
10.368 11.255 12.134 13.004 13.865
9.787 10.575 11.348 12.106 12.849
9.253 9.954 10.635 11.296 11.938
8.760 9.385 9.986 10.563 11.118
8.306 8.863 9.394 9.899 10.380
7.887 8.384 8.853 9.295 9.712
7.499 7.943 8.358 8.745 9.108
7.139 7.536 7.904 8.244 8.559
6.805 7.161 7.487 7.786 8.061
6.495 6.814 7.103 7.367 7.606
16 17 18 19 20
14.718 15.562 16.398 17.226 18.046
13.578 14.292 14.992 15.679 16.351
12.561 13.166 13.754 14.324 14.878
11.652 12.166 12.659 13.134 13.590
10.838 11.274 11.690 12.085 12.462
10.106 10.477 10.828 11.158 11.470
9.447 9.763 10.059 10.336 10.594
8.851 9.122 9.372 9.604 9.818
8.313 8.544 8.756 8.950 9.129
7.824 8.022 8.201 8.365 8.514
Periods (n) 1 2 3 4 5
11% 0.901 1.713 2.444 3.102 3.696
12% 0.893 1.690 2.402 3.037 3.605
13% 0.885 1.668 2.361 2.974 3.517
14% 0.877 1.647 2.322 2.914 3.433
Interest rates (r) 15% 16% 0.870 0.862 1.626 1.605 2.283 2.246 2.855 2.798 3.352 3.274
17% 0.855 1.585 2.210 2.743 3.199
18% 0.847 1.566 2.174 2.690 3.127
19% 0.840 1.547 2.140 2.639 3.058
20% 0.833 1.528 2.106 2.589 2.991
6 7 8 9 10
4.231 4.712 5.146 5.537 5.889
4.111 4.564 4.968 5.328 5.650
3.998 4.423 4.799 5.132 5.426
3.889 4.288 4.639 4.946 5.216
3.784 4.160 4.487 4.772 5.019
3.685 4.039 4.344 4.607 4.833
3.589 3.922 4.207 4.451 4.659
3.498 3.812 4.078 4.303 4.494
3.410 3.706 3.954 4.163 4.339
3.326 3.605 3.837 4.031 4.192
11 12 13 14 15
6.207 6.492 6.750 6.982 7.191
5.938 6.194 6.424 6.628 6.811
5.687 5.918 6.122 6.302 6.462
5.453 5.660 5.842 6.002 6.142
5.234 5.421 5.583 5.724 5.847
5.029 5.197 5.342 5.468 5.575
4.836 4.988 5.118 5.229 5.324
4.656 4.793 4.910 5.008 5.092
4.486 4.611 4.715 4.802 4.876
4.327 4.439 4.533 4.611 4.675
16 17 18 19 20
7.379 7.549 7.702 7.839 7.963
6.974 7.120 7.250 7.366 7.469
6.604 6.729 6.840 6.938 7.025
6.265 6.373 6.467 6.550 6.623
5.954 6.047 6.128 6.198 6.259
5.668 5.749 5.818 5.877 5.929
5.405 5.475 5.534 5.584 5.628
5.162 5.222 5.273 5.316 5.353
4.938 4.990 5.033 5.070 5.101
4.730 4.775 4.812 4.843 4.870
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November 2014
FORMULAE PROBABILITY A ∪ B = A or B. A ∩ B = A and B (overlap). P(B | A) = probability of B, given A. Rules of Addition If A and B are mutually exclusive: If A and B are not mutually exclusive:
P(A P(A
∪ B) = P(A) + P(B) ∪ B) = P(A) + P(B) – P(A ∩ B)
Rules of Multiplication If A and B are independent:: If A and B are not independent:
P(A P(A
∩ B) = P(A) * P(B) ∩ B) = P(A) * P(B | A)
E(X) = ∑ (probability * payoff)
DESCRIPTIVE STATISTICS Arithmetic Mean
x =
∑x n
x=
∑ fx ∑f
(frequency distribution)
Standard Deviation
SD =
∑( x − x ) 2 n
SD =
∑ fx 2 − x 2 (frequency distribution) f ∑
INDEX NUMBERS Price relative = 100 * P1/P0
Price:
Quantity:
P ∑ w ∗ 1 Po ∑w
Quantity relative = 100 * Q1/Q0
x 100
Q ∑ w ∗ 1 Qo x 100 ∑w
TIME SERIES Additive Model Series = Trend + Seasonal + Random Multiplicative Model Series = Trend * Seasonal * Random
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FINANCIAL MATHEMATICS Compound Interest (Values and Sums) Future Value S, of a sum of X, invested for n periods, compounded at r% interest S = X[1 + r]
n
Annuity Present value of an annuity of $1 per annum receivable or payable for n years, commencing in one year, discounted at r% per annum:
PV =
1 1 1 − r [1 + r ] n
Perpetuity Present value of $1 per annum, payable or receivable in perpetuity, commencing in one year, discounted at r% per annum: PV =
1 r
LEARNING CURVE b
Yx = aX
where: Yx = the cumulative average time per unit to produce X units; a = the time required to produce the first unit of output; X = the cumulative number of units; b = the index of learning. The exponent b is defined as the log of the learning curve improvement rate divided by log 2. INVENTORY MANAGEMENT Economic Order Quantity EOQ =
2C o D Ch
where:
Co Ch D
= = =
cost of placing an order cost of holding one unit in inventory for one year annual demand
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November 2014
LIST OF VERBS USED IN THE QUESTION REQUIREMENTS A list of the learning objectives and verbs that appear in the syllabus and in the question requirements for each question in this paper. It is important that you answer the question according to the definition of the verb. LEARNING OBJECTIVE Level 1 - KNOWLEDGE What you are expected to know.
Level 2 - COMPREHENSION What you are expected to understand.
VERBS USED
DEFINITION
List State Define
Make a list of Express, fully or clearly, the details/facts of Give the exact meaning of
Describe Distinguish Explain
Communicate the key features Highlight the differences between Make clear or intelligible/State the meaning or purpose of Recognise, establish or select after consideration Use an example to describe or explain something
Identify Illustrate Level 3 - APPLICATION How you are expected to apply your knowledge.
Apply Calculate Demonstrate Prepare Reconcile Solve Tabulate
Level 4 - ANALYSIS How are you expected to analyse the detail of what you have learned.
Level 5 - EVALUATION How are you expected to use your learning to evaluate, make decisions or recommendations.
November 2014
Analyse Categorise Compare and contrast
Put to practical use Ascertain or reckon mathematically Prove with certainty or to exhibit by practical means Make or get ready for use Make or prove consistent/compatible Find an answer to Arrange in a table
Construct Discuss Interpret Prioritise Produce
Examine in detail the structure of Place into a defined class or division Show the similarities and/or differences between Build up or compile Examine in detail by argument Translate into intelligible or familiar terms Place in order of priority or sequence for action Create or bring into existence
Advise Evaluate Recommend
Counsel, inform or notify Appraise or assess the value of Advise on a course of action
19
Performance Operations
Performance Pillar
Operational Level Paper
P1 – Performance Operations
November 2014
Wednesday Morning Session
Performance Operations
20
November 2014
