DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO SO
Performance Pillar
Wednesday 28 August 2013
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 7.
Section C comprises 2 questions and is on pages 8 to 11.
Maths tables and formulae are provided on pages 13 to 16.
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
TURN OVER
 The Chartered Institute of Management Accountants 2013
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
AB is preparing its cash budget for next year. The estimated accounts payable balance at
the beginning of next year is $540,000. The budgeted purchases for next year are
$6,800,000, occurring evenly throughout the year. It is estimated that 75% of purchases
will be on credit and the remainder will be for cash. The company pays for credit
purchases in the month following purchase.
The budgeted cash payments to suppliers next year are:
A
$6,375,000
B
$6,773,333
C
$6,915,000
D
$5,215,000
(2 marks)
1.2
A just-in-time (JIT) purchasing system may be defined as:
A
A purchasing system in which the purchase of material is contracted so that the receipts
and usage of material coincide.
B
A purchasing system which is based on estimated demand for finished products.
C
A purchasing system where the purchase of material is triggered when inventory levels
reach a pre-determined re-order level.
D
A purchasing system which minimises the sum of inventory ordering costs and inventory
holding costs.
(2 marks)
Performance Operations
2
September 2013
The following data are given for sub-questions 1.3 and 1.4 below
A company is estimating its costs based on past information. The total costs incurred by the
company at different levels of output were as follows:
Output
(units)
160,000
185,000
190,000
Total costs
$
2,420,000
2,775,000
2,840,000
The company uses the high-low method to separate total costs into their fixed and variable
elements. Ignore inflation.
1.3
The estimated total costs for an output of 205,000 units is:
A
$2,870,000
B
$3,050,000
C
$3,064,211
D
$3,080,857
(2 marks)
1.4
The company has now established that there is a stepped increase in fixed costs of
$30,000 when output reaches 180,000 units.
The estimate of total costs for an output of 175,000 units using the additional information
is:
A
$2,645,000
B
$2,275,000
C
$2,615,000
D
$2,630,000
(2 marks)
Section A continues on the next page
TURN OVER
September 2013
3
Performance Operations
1.5
A company is considering investing in a project with an expected life of four years. The
project has a positive net present value of $280,000 when cash flows are discounted at
12% per annum. The project’s estimated cash flows include net cash inflows of $320,000
for each of the four years. No tax is payable on projects of this type.
The percentage decrease in the estimated annual net cash inflows that would cause the
company’s management to reject the project from a financial perspective is, to the nearest
0.1%:
A
87.5%
B
21.9%
C
3.5%
D
28.8%
(2 marks)
1.6
A bond has a coupon rate of 6% per annum and will repay its face value of $100 on its
maturity in four years’ time. The yield to maturity on similar bonds is 4% per annum. The
annual interest has just been paid for the current year.
Required:
Calculate the expected market value of the bond at today’s date.
(3 marks)
1.7
A company has annual sales revenues of $30 million and the following working capital
periods:
Inventory conversion period
Accounts receivable collection period
Accounts payable payment period
2.5 months
2.0 months
1.5 months
Production costs represent 70% of sales revenue.
Required:
Calculate the total amount held in working capital excluding cash and cash equivalents.
(3 marks)
Performance Operations
4
September 2013
1.8
A company uses 40,000 units of a particular item of inventory each year. Demand is
predictable and spread evenly throughout the year. Ordering costs are $70 per order and
the cost of holding one unit in inventory is $1.40 per annum.
Required:
(i)
Calculate the economic order quantity (EOQ).
(2 marks)
(ii)
Calculate the total annual ordering and holding costs for the inventory item
assuming the company uses the EOQ and no buffer inventory is held.
(2 marks)
(Total for sub-question 1.8 = 4 marks)
(Total for Section A = 20 marks)
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
September 2013
5
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, when deciding its cash management policy, has to balance the costs of
holding insufficient cash with the costs of holding cash. The motives for holding cash can
be categorised as follows:



Transaction motive
Precautionary motive
Speculative motive
Required:
Explain the three categories of motives for holding cash given above.
(5 marks)
(b)
A company has to decide which of three mutually exclusive projects to undertake. The
directors believe that success of the projects will depend on consumer reaction. There is a
25% chance that consumer reaction will be strong, a 40% chance that consumer reaction
will be good and a 35% chance that consumer reaction will be weak. The company uses
expected value to make this type of decision.
The net present value for each of the possible outcomes is as follows:
Consumer reaction
Project A
Project B
Project C
$000s
$000s
$000s
1,000
1,600
1,200
Good
250
300
375
Weak
200
140
100
Strong
A market research company believes it can provide perfect information on consumer
reaction.
Required:
Calculate the maximum amount that should be paid for the information from the market
research company.
(5 marks)
(c)
Explain the potential benefits for a company from using a just-in-time (JIT) production
system.
(5 marks)
Performance Operations
6
September 2013
(d)
CD has annual sales revenue of $2,007,500 and trade receivables of $330,000 which
represent 60 days’ sales based on a 365 day year. Sales and trade receivables are
expected to continue at the same level for the next year. CD pays interest on its overdraft
at a rate of 10% per annum.
CD is considering the use of non-recourse factoring to manage its trade receivables. The
factor will pay 80% of the trade receivable when a credit sale is made and the remaining
20% when the cash is received from the customer. It is estimated that, as a result of the
factor’s expertise, cash will be received from customers in 50 days. The factor will charge
interest at a rate of 12% per annum on cash advanced and a fee of 2% of annual sales
revenue. CD estimates that credit control costs will be reduced by $30,000 each year if
the factor is used.
Required:
Calculate whether it is financially beneficial for the company to use the factor.
(5 marks)
(e)
A supplier of pre-packed sandwiches is trying to decide how many batches of sandwiches
should be prepared for each day. Any sandwiches prepared and not sold are thrown away
at the end of the day.
Each batch of sandwiches can be sold for $100 and has a variable cost of $40. It is
estimated that demand will be 20, 21, 22 or 23 batches each day and therefore a
minimum of 20 batches and a maximum of 23 batches will be prepared per day.
The management accountant has started to produce a pay-off table showing the
contribution for the possible outcomes as follows:
Demand
20 batches
21 batches
22 batches
23 batches
20 batches
$1,200
$1,200
Number of batches prepared
21 batches
22 batches
$1,160
$1,120
$1,260
$1,220
23 batches
$1,080
$1,180
Required:
(i)
Calculate the figures that are required to complete the pay-off table.
(2 marks)
(ii)
Apply the minimax regret criterion to determine the number of batches that
should be prepared each day.
(3 (3 marks)
(Total for sub-question (d) = 5 marks)
(f)
Explain the differences between activity based budgeting and incremental budgeting.
(5 marks)
(Total for Section B = 30 marks)
End of Section B. Section C begins on page 8
September 2013
7
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
DE is a distributor of three models of Tablet PCs (Premium, Deluxe and Superfast) to retailers.
The details of the sales volume budget, standard selling prices and standard variable costs for
each model for July were as follows:
Sales volume budget
Premium
Deluxe
Superfast
7,000 units
5,000 units
8,000 units
Premium
$ per unit
400
300
Standard selling price
Standard variable cost
Deluxe
$ per unit
450
320
Superfast
$ per unit
500
350
At the end of July the senior management of the company decided that the impact of the failure
of a major competitor had been underestimated and produced a revised sales volume budget as
follows:
Revised sales volume budget
Premium
Deluxe
Superfast
9,800 units
7,000 units
11,200 units
Actual results for July
Sales volume (units)
Selling price per unit
Variable cost per unit
Performance Operations
Premium
11,000
$410
$300
8
Deluxe
6,000
$440
$320
Superfast
9,000
$520
$350
September 2013
Required:
(a)
Prepare a statement that reconciles the original budgeted contribution with
the actual contribution for July, including planning and operational variances.
Your statement should show the variances in as much detail as possible for
each individual model, and in total.
(13 marks)
(b)
Explain why separating the sales volume variance into a sales mix and a
sales quantity variance will provide useful information for the company’s
sales manager. You should use the variances calculated in (a) to illustrate
your answer.
(6 marks)
(c)
Explain why separating variances into their planning and operational
components provides better information for planning and control purposes.
(6 marks)
(Total for Question Three = 25 marks)
Section C continues on the next page
TURN OVER
September 2013
9
Performance Operations
Question Four
A car rental company is considering setting up a division to provide chauffeur driven limousines
for weddings and other events. The proposed investment will include the purchase of a fleet of
20 limousines at a cost of $200,000 each. It is estimated that the limousines will have a useful
life of five years and a resale value of $30,000 each at the end of their useful life. The company
uses the straight line method of depreciation.
Revenue and variable costs
Each limousine will be hired to customers for $800 per day. The variable costs, including fuel,
cleaning and the chauffeur’s wages, will be $300 per day. The limousines will be available for
hire 350 days of the year. A market specialist was hired at a cost of $20,000 to estimate the
demand for the limousines in Year 1. The market specialist estimated that each limousine will be
hired for 260 days in Year 1 and that the number of days’ hire will increase by 10 days each year
for the remaining life of the project.
Fixed costs
Each limousine will incur fixed costs, including maintenance and depreciation, of $45,000 a year.
The administration of the division is expected to cost $300,000 each year. The garaging of the
limousines will not require any additional investment but will utilise existing facilities for which
there is no other use. The head office will charge the division an annual fee of 10% of sales
revenue for the use of these facilities.
Taxation
The company’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. The limousines will be eligible for tax depreciation.
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.
Other information
Ignore inflation.
The company uses a cost of capital of 12% per annum to evaluate projects of this type.
Performance Operations
10
September 2013
Required:
(a)
Evaluate whether the company should go ahead with the project. You should
use net present value as the basis of your evaluation.
(14 marks)
The company is also carrying out a review of its existing car rental business. The
company is deciding whether it should replace the cars that it uses after one, two or
three years. The cars will not be kept longer than three years due to the higher risk
of breakdowns.
The estimated relevant cash flows for the three possible options for each car can be
obtained from the following information:
Year
0
1
2
3
Cash
outflows
$
(30,000)
(1,500)
(2,700)
(3,600)
Residual
Value
$
21,000
15,000
9,000
The company uses a cost of capital of 12% for decisions of this type.
Required:
(b)
Calculate, using the annualised equivalent method, whether the cars should
be replaced after one, two or three years. You should ignore taxation and
inflation.
.
(7 marks)
(c)
Explain the limitations of the annualised equivalent method for making
decisions to replace non-current assets.
(4 marks)
(Total for Question Four = 25 marks)
(Total for Section C = 50 marks)
End of question paper
Maths tables and formulae are on pages 13 to 16
September 2013
11
Performance Operations
This page is blank
Performance Operations
12
September 2013
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
September 2013
13
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
Performance Operations
14
September 2013
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  B) = P(A) + P(B)
P(A  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  B) = P(A) * P(B)
P(A  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:
Quantity relative = 100 * Q1/Q0
P 
 w   1 
 Po 
x 100
w
Q 
 w   1 
 Qo  x 100
w
TIME SERIES
Additive Model
Series = Trend + Seasonal + Random
Multiplicative Model
Series = Trend * Seasonal * Random
September 2013
15
Performance Operations
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
Yx = aX
b
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
Performance Operations
16
September 2013
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September 2013
17
Performance Operations
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Performance Operations
18
September 2013
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.
September 2013
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
September 2013
Performance Operations
20
September 2013