Deck 1: Managerial Accounting: Tools for Decision Making

Question 1

A primary goal of managerial accounting is to provide information to investment managers who analyze a company's stock for external investors.

Answer 1

False

Question 2

Value chain analysis concerns the study of value-producing activities, stretching from basic raw materials to the final consumer of a product or service.

Answer 2

True

Question 3

An organization's mission is best described as the basic purpose toward which activities are directed.

Answer 3

True

Question 4

One of the companies to first employ a successful cost leadership strategy was Carnegie Steel Company.

Question 5

Competition among companies normally takes place only on the dimension of price/cost.

Question 6

The decision to use both full-time and part-time employees during the holiday season is an example of a structural cost driver.

Question 7

All costs have at least one primary cost driver.

Question 8

Most costs are actually incurred as a result of activity cost drivers.

Question 9

The best criterion for determining if a given action or choice is ethical is to determine if it is legal, because all legal actions are inherently ethical.

Question 10

Managers who prepare and/or have responsibility for managerial accounting information rarely encounter choices that have questionable ethical dimensions or overtones.

Question 11

The three analyses that comprise strategic cost management include each of the following except:

A) Ratio analysis
B) Cost driver analysis
C) Strategic position analysis
D) Value chain analysis

Question 12

Strategic Position Analysis is best defined as:

A) The process of making the organization into a well ordered whole
B) Fundamental choices about the size and scope of operations and technologies
C) The formulation of a program for a specific goal
D) An organization's basic way of competing to sell products and services

Question 13

A goal is best defined as:

A) The mission of an organization
B) The implementation of specific ideas
C) The fundamental purpose of an organization
D) A definable and measurable objective

Question 14

Which of the following is not one of the three strategic positions that Porter views as leading to business success?

A) Market niche
B) Cost leadership
C) All things to all people
D) Product or service differentiation

Question 15

Product or service differentiation involves:

A) Any changes made to a product or service
B) The use of new technologies in manufacturing
C) Shifting sales to growing markets
D) Creating something that is perceived as unique and worth a premium price

Question 16

The process of selecting strategies to achieve goals is often referred to as:

A) Controlling
B) Organizing
C) Motivating
D) Planning

Question 17

The process of making the organization into a well-ordered whole is referred to as:

A) Organizing
B) Controlling
C) Motivating
D) Planning

Question 18

The process of ensuring that results agree with plans is referred to as:

A) Controlling
B) Decision making
C) Organizing
D) Planning

Question 19

The act of delegating authority for implementing plans to other managers and employees can be viewed as an aspect of:

A) Controlling
B) Decision making
C) Organizing
D) Planning

Question 20

_______________ are fundamental choices about the size and scope of operations and about technologies employed in delivering products or services to customers.

A) Activities
B) Management systems
C) Organizational strategies
D) Structural cost drivers

Question 21

This is an organizational cost driver for a discount department store chain:

A) The decision to price lower than a key competitor
B) The decision to rearrange merchandise within a store
C) The decision to issue a purchase order for raw materials
D) The decision to sale product globally versus only domestically

Question 22

A decision to work closely with a limited number of suppliers for the purpose of ensuring that the proper materials are available at the optimal time is an example of:

A) A batch level cost driver
B) An activity cost driver
C) An organizational cost driver
D) A structural cost driver

Question 23

_______________ are specific units of work performed to serve customer needs that consume costly resources.

A) Activity cost drivers
B) Customer cost drivers
C) Organizational cost drivers
D) Structural cost drivers

Question 24

Examples of activity cost drivers include all of the following except:

A) Inspecting incoming raw materials
B) Machine time spent working on a product
C) Deciding how to arrange raw materials inventory within the warehouse
D) Receiving (loading) raw materials into the warehouse

Question 25

Ethical behavior:

A) Always involves choosing between actions that are clearly right or wrong
B) Is best guided by a policy of placing corporate performance above individual ends
C) Is best described as any actions that are permitted by law
D) Is not guided by well-defined rules and is often subjective

Question 26

Ethics deals with:

A) The propriety of a course of action
B) The fitness of a course of action
C) The moral quality of a course of action
D) All of the above

Question 27

Financial accounting is primarily focused on:

A) Providing the Internal Revenue Service with information to determine the amount of taxes owed
B) Providing managers with relevant information to help achieve organizational goals
C) Providing investors with useful information for valuing securities
D) Providing information for internal users

Question 28

Managerial accounting is primarily focused on:

A) Providing information for internal and external users
B) Providing general purpose financial statements
C) Providing special-purpose information and reports
D) Following generally accepted accounting principles

Question 29

Which of the following is not a component of strategic cost management?

A) Ratio analysis
B) Value chain analysis
C) Cost driver analysis
D) Strategic position analysis

Question 30

Managerial accounting must conform to which of the following standards?

A) Generally Accepted Accounting Principles (GAAP)
B) International Financial Reporting Standards (IFRS)
C) Internal Revenue Service tax code
D) None of the above

Question 31

Which of the following phrases is most descriptive of managerial accounting?

A) Often used to state corporate goals
B) May be subjective
C) Typically prepared quarterly or annually
D) Keeps records of assets and liabilities

Question 32

Which of the following phrases is most descriptive of financial accounting?

A) May measure time or customer satisfaction
B) Future oriented
C) Subject to cost-benefit analysis
D) Highly aggregated statements

Question 33

Which of the following statements best defines the mission of an organization?

A) Increase next year's sales by 10 percent over current year sales
B) Become the world's largest provider of consumer goods
C) Adopt cost effective plan for providing new products and services to customers
D) Providing high quality products and services to customers

Question 34

Which of the following statements best defines a goal for an organization?

A) Increase next year's sales by 10 percent over current year sales
B) Providing high quality products and services to customers
C) Adopt a cost effective plan for providing new products and services to customers
D) Become the world's largest provider of consumer goods

Question 35

Which of the following statements best defines a strategy for an organization?

A) Increase next year's sales by 10 percent over current year sales
B) Providing high quality products and services to customers
C) Adopt a cost effective plan for providing new products and services to customers
D) Become the world's largest provider of consumer goods

Question 36

According to Michael Porter, which of the following is an example of cost leadership as a business strategy?

A) A regional beer brewer that caters to local tastes.
B) A glass manufacturer utilizing research and development to identify new applications for glass and ceramics.
C) An online bookseller utilizing efficient scale facilities and overhead cost control.
D) A manufacturer focused on designing and building corporate jet aircraft.

Question 37

According to Michael Porter, which of the following is an example of product or service differentiation as a business strategy?

A) A regional beer brewer that caters to local tastes.
B) An automobile manufacturer that focuses on the rapid introduction of technological change in new automobile design.
C) An online bookseller utilizing efficient scale facilities and overhead cost control.
D) A manufacturer focused on designing and building corporate jet aircraft.

Question 38

Which of the following descriptions best describes the process of planning?

A) Comparing the budget with actual results
B) Delegating authority to employees to address customer complaints
C) Preparing a budget for an organization that meets sales goals for the upcoming year
D) Assigning managers to different regional centers to facilitate distribution of goods to customers

Question 39

Which of the following descriptions best describes the process of controlling?

A) Comparing the budget with actual results
B) Preparing a budget for an organization that meets sales goals for the upcoming year
C) Delegating authority to employees to address customer complaints
D) Assigning managers to different regional centers to facilitate distribution of goods to customers

Question 40

Delegating responsibility and authority to employees in an organization is an example of:

A) Planning
B) Organizing
C) Controlling
D) Motivating

Question 41

Which of the following departments often found in a merchandising organization would be classified as a line department?

A) Maintenance
B) Human Resources
C) Payroll
D) Home Furnishings

Question 42

Which of the following employees often found in a manufacturing organization would be classified as part of a line department?

A) Production Manager
B) Treasurer
C) Chief Information Officer (CIO)
D) Controller

Question 43

Which of the following performance factors is least relevant for a "world-class" company to compete globally?

A) Price/Cost
B) Location
C) Service
D) Quality

Question 44

To stay competitive in the express delivery business, both Federal Express and United Parcel Service must compete against each other based on which of the following?

A) Price/Cost
B) Service
C) Quality
D) All of the above

Question 45

To compete on the basis of price, the seller must carefully manage:

A) The degree to which products or services meet customer's needs.
B) Timely delivery and customer support.
C) Communications between buyer and seller.
D) Operating and maintenance costs.

Question 46

To compete on the basis of quality, the seller must carefully manage:

A) The degree to which products or services meet customer's needs
B) Timely delivery and customer support
C) Communications between buyer and seller
D) Operating and maintenance costs

Question 47

To compete on the basis of service, the seller must carefully manage:

A) The degree to which products or services meet customer's needs
B) Timely delivery and customer support
C) Communications between buyer and seller
D) Operating and maintenance costs

Question 48

Which of the following best defines a structural cost driver?

A) Fundamental choices about the size and scope of operations and technologies employed in delivering products or services to customers
B) Choices concerning the organization of activities and the involvement of persons inside and outside the organization in decision making
C) Specific units of work performed to serve customer needs that consume costly resources
D) The process of ensuring that results agree with plans

Question 49

Which of the following best defines an organizational cost driver?

A) Fundamental choices about the size and scope of operations and technologies employed in delivering products or services to customers.
B) Choices concerning the organization of activities and the involvement of persons inside and outside the organization in decision making
C) Specific units of work performed to serve customer needs that consume costly resources
D) The process of ensuring that results agree with plans

Question 50

Which of the following best defines an activity cost driver?

A) Fundamental choices about the size and scope of operations and technologies employed in delivering products or services to customers
B) Choices concerning the organization of activities and the involvement of persons inside and outside the organization in decision making
C) Specific units of work performed to serve customer needs that consume costly resources
D) The process of ensuring that results agree with plans

Question 51

Which of the following is an example of an activity cost driver?

A) Deciding how to arrange raw materials inventory within a warehouse
B) Designing components of a product so they can fit together only in the correct manner
C) Determining the best location for a manufacturing facility
D) Receiving raw materials into the warehouse
E) None of the above

Question 52

Which of the following is an example of an organizational cost driver?

A) Deciding how to arrange raw materials inventory within a warehouse
B) Inspecting incoming raw materials
C) Determining the best location for a manufacturing facility
D) Receiving raw materials into the warehouse
E) None of the above

Question 53

Which of the following is an example of a structural cost driver?

A) Deciding how to arrange raw materials inventory within a warehouse
B) Moving items being manufactured between workstations
C) Determining the best location for a manufacturing facility
D) Placing a purchase order for raw materials
E) None of the above

Question 54

All of the following are examples of activity cost drivers except:

A) Placing a purchase order for raw materials
B) Inspecting incoming raw materials
C) Hiring and training a new employee
D) Providing employees with cost information and authorizing them to make decisions

Question 55

Which of the following best describes ethics?

A) The system of policies, processes, laws, and regulations that affect the way a company is directed and controlled
B) The moral quality, fitness, or propriety of a course of action that can injure or benefit people
C) What is permitted under the law
D) Understanding the difference between right and wrong

Question 56

Which of the following best describes corporate governance?

A) The system of policies, processes, laws, and regulations that affect the way a company is directed and controlled
B) The moral quality, fitness, or propriety of a course of action that can injure or benefit people
C) What is permitted under the law
D) Understanding the difference between right and wrong

Question 57

A code of ethics should do which of the following?

A) Provide a summary of a company's policies that define ethical standards of employee conduct
B) Include broad philosophical statements about behavior
C) Provide a common foundation for addressing ethical issues
D) All of the above

Question 58

Which of the following can be considered to be unethical behavior?

A) Accelerating or decelerating shipments at the end of the quarter to meet current earnings forecasts
B) Allocating overhead costs to a product based on labor hours
C) Estimating sales in order to prepare the annual budget for the company
D) Ordering more raw materials than forecasted in anticipation of uncertain demand

Question 59

Which of the following can be considered to be unethical behavior?

A) Forecasting raw material requirements for next month's production forecast
B) Purchasing raw materials from a relative or friend rather than seeking bids
C) Inspecting incoming raw materials from a supplier
D) Working closely with a limited number of suppliers

Question 60

Which of the following can be considered to be unethical behavior?

A) Forecasting the amount of ending inventory on hand at the end of a budgetary period
B) Transferring ending inventory to another warehouse in another geographic location
C) Keeping inventory that is unlikely to be used so as to avoid recording a loss
D) Building up inventory in anticipation of increased sales in the next accounting period

Question 61

Which of the following can be considered to be unethical behavior?

A) Assigning direct labor costs to Contract A and Contract B using different rates for different employees
B) Assigning different direct material costs to Contract A and Contract B based on usage
C) Assigning overhead costs to Contract A based on labor hours and Contract B based on machine hours
D) Assigning costs of Contract A to Contract B to avoid an unfavorable performance report on Contract A

Question 62

Codes of ethics are limited to which of the following types of organizations:

A) Professional organizations and associations
B) For-profit organizations
C) Not-for-profit organizations
D) All of the above

Question 63

Corporate social responsibility would include all of the following elements except:

A) Providing quality daycare for young dependents of an organization
B) Estimating the cost of environmental clean-up upon the ultimate disposal of an asset
C) Limiting the return on investment to investors
D) Donating employee time for community service

Question 64

From a managerial accounting standpoint, which of the following areas of the Sarbanes-Oxley Act of 2002 (SOX) are most pertinent?

A) External auditing standards
B) Review of internal controls
C) Codes of ethics for financial officers
D) Penalties for fraud

Question 65

Which of the following phrases is primarily relevant to managerial accounting as opposed to financial accounting?

A) Preparing periodic financial statements
B) Calculating earnings per share for shareholders
C) Helping managers make decisions
D) Summarizing information about past events

Question 66

Which of the following phrases is primarily relevant to financial accounting as opposed to managerial accounting?

A) Analyzing cost drivers
B) Helping managers to make decisions
C) Evaluating a company's strategic position
D) Conforming to external standards

Question 67

Ethics deals will all of the following except:

A) The fitness of a course of action
B) The moral quality of a course of action
C) The legal responsibility under law
D) The propriety of a course of action

Question 68

Ethical behavior:

A) Is guided by well-defined rules of conduct
B) Involves choosing between actions that are either right or wrong
C) Is best guided by placing corporate performance above individual ends
D) Is often subjective and based on the moral quality, fitness, or propriety of a course of action

Question 69

You have decided to start a lawn service business to help pay your tuition so that you can complete your undergraduate accounting degree. You plan to provide various lawn maintenance services that will include lawn mowing services, aeration and fertilization. You and two of your friends have agreed to work for you in this new business endeavor.

-Which of the following would best describe the mission of your new business?

A) To provide high quality lawn services and make a profit
B) To add five new customers per month
C) Identify new lawn services that will attract new customers and increase revenues
D) Become the largest provider of lawn services in the city

Question 70

You have decided to start a lawn service business to help pay your tuition so that you can complete your undergraduate accounting degree. You plan to provide various lawn maintenance services that will include lawn mowing services, aeration and fertilization. You and two of your friends have agreed to work for you in this new business endeavor.

-Which of the following would best describe a goal for your new business?

A) To provide high quality lawn services and make a profit.
B) To add five new customers per month.
C) Identify new lawn services that will attract new customers and increase revenues.
D) Become the largest provider of lawn services in the city.

Question 71

You have decided to start a lawn service business to help pay your tuition so that you can complete your undergraduate accounting degree. You plan to provide various lawn maintenance services that will include lawn mowing services, aeration and fertilization. You and two of your friends have agreed to work for you in this new business endeavor.

-Which of the following would best describe a strategy for your new business?

A) To provide high quality lawn services and make a profit
B) To add five new customers per month
C) Identify new lawn services that will attract new customers and increase revenues
D) Become the largest provider of lawn services in the city

Question 72

You have decided to start a lawn service business to help pay your tuition so that you can complete your undergraduate accounting degree. You plan to provide various lawn maintenance services that will include lawn mowing services, aeration and fertilization. You and two of your friends have agreed to work for you in this new business endeavor.

-Which of the following would best describe planning for your new business?

A) Assigning workers to perform lawn services for various clients
B) Preparing a cash budget to estimate your monthly revenues and expenditures
C) Comparing the actual cash balance with the budgeted cash budget each month
D) Preparing monthly billing statements for clients

Question 73

You have decided to start a lawn service business to help pay your tuition so that you can complete your undergraduate accounting degree. You plan to provide various lawn maintenance services that will include lawn mowing services, aeration and fertilization. You and two of your friends have agreed to work for you in this new business endeavor.

-Which of the following would best describe organizing for your new business?

A) Assigning workers to perform lawn services for various clients
B) Preparing a cash budget to estimate your monthly revenues and expenditures
C) Comparing the actual cash balance with the budgeted cash budget each month
D) Preparing monthly billing statements for clients

Question 74

You have decided to start a lawn service business to help pay your tuition so that you can complete your undergraduate accounting degree. You plan to provide various lawn maintenance services that will include lawn mowing services, aeration and fertilization. You and two of your friends have agreed to work for you in this new business endeavor.

-Which of the following would best describe controlling for your new business?

A) Assigning workers to perform lawn services for various clients
B) Preparing a cash budget to estimate your monthly revenues and expenditures
C) Comparing the actual cash balance with the budgeted cash budget each month
D) Preparing monthly billing statements for clients

Question 75

You have decided to start a lawn service business to help pay your tuition so that you can complete your undergraduate accounting degree. You plan to provide various lawn maintenance services that will include lawn mowing services, aeration and fertilization. You and two of your friends have agreed to work for you in this new business endeavor.

-Which of the following best describes an organizational cost driver for your new business?

A) Determining the types of lawn services that you will provide for clients
B) Providing employees with the authority to make decisions regarding a client
C) Preparing monthly billing statements for clients
D) Hiring and training new employees

Question 76

You have decided to start a lawn service business to help pay your tuition so that you can complete your undergraduate accounting degree. You plan to provide various lawn maintenance services that will include lawn mowing services, aeration and fertilization. You and two of your friends have agreed to work for you in this new business endeavor.

-Which of the following best describes a structural cost driver for your new business?

A) Determining the types of lawn services that you will provide for clients.
B) Providing employees with the authority to make decisions regarding a client.
C) Preparing monthly billing statements for clients.
D) Hiring and training new employees.

Question 77

Define strategic cost management and briefly discuss the three themes that make up strategic cost management.

Question 78

Identify and describe the three strategic positions that lead to business success.

Question 79

Briefly discuss the planning, organizing, and controlling functions of management.

Question 80

Differentiate among structural, organizational, and activity cost drivers.