Deck 1: The Changing Role of Managerial Accounting in a Dynamic Business Environment

Question 1

Which of the following functions is best described as choosing among available alternatives?

A)Decision making.
B)Planning.
C)Directing operational activities.
D)Controlling.
E)Budgeting.

Answer 1

A

Question 2

Which of the following involves the coordination of daily business functions within an organization?

A)Decision making.
B)Planning.
C)Directing operational activities.
D)Controlling.
E)Motivating.

Answer 2

C

Question 3

Which of the following perspectives is normally absent in a balanced scorecard?

A)Financial.
B)Customer.
C)Internal operations.
D)Learning and innovation/growth.
E)None of thesE.

Answer 3

E

Question 4

Taurus Company has set various goals,and management is now taking appropriate action to ensure that the firm achieves these goals.One such action is to reduce outlays for overhead,which have exceeded budgeted amounts.Which of the following functions best describes this process?

A)Decision making.
B)Planning.
C)Coordinating.
D)Controlling.
E)Organizing.

Question 5

Managerial accounting:

A)is unregulated.
B)produces information that is useful only for manufacturing organizations.
C)is based exclusively on historical data.
D)is regulated by the Securities and Exchange Commission (SEC).
E)generally focuses on reporting information about the enterprise in its entirety rather than by subunits.

Question 6

A controller is normally involved with preparing financial statements.

Question 7

Which of the following managerial functions involves a detailed financial and operational description of anticipated operations?

A)Decision making.
B)Planning.
C)Directing operational activities.
D)Controlling.
E)Measuring.

Question 8

The process of encouraging and authorizing workers to take appropriate initiatives to improve the overall firm is commonly known as:

A)planning and control.
B)employee empowerment.
C)personnel aggressiveness.
D)decision making.
E)problem recognition and solution.

Question 9

The role of managerial accounting information in assisting management is a(n):

A)financial-directing role.
B)attention-directing role.
C)planning and controlling role.
D)organizational role.
E)problem-solving rolE.

Question 10

Which of the following is not an objective of managerial accounting?

A)Providing information for decision making and planning.
B)Assisting in directing and controlling operations.
C)Maximizing profits and minimizing costs.
D)Measuring the performance of managers and subunits.
E)Motivating managers toward the organization's goals.

Question 11

Which of the following business models considers financial,customer,internal operating,and other measures in the evaluation of performance?

A)Deterministic simulation.
B)Balanced scorecard.
C)Payoff matrix.
D)Decision tree.
E)Chart of operating performance (COP).

Question 12

The day-to-day work of management teams will typically comprise all of the following activities except:

A)decision making.
B)planning.
C)cost minimizing.
D)directing operational activities.
E)controlling.

Question 13

Middle-level managers would likely be considered internal users of accounting information rather than external users.

Question 14

The upper limit on the production of goods and services if everything works perfectly is known as practical capacity.

Question 15

Which of the following statements about managerial accountants is false?

A)Managerial accountants more and more are considered "business partners."
B)Managerial accountants often are part of cross-functional teams.
C)An increasing number of organizations are segregating managerial accountants in separate managerial-accounting departments.
D)In a number of companies,managerial accountants make significant business decisions and resolve operating problems.
E)The role of managerial accountants has changed considerably over the past decadE.

Question 16

All of the following entities would have a need for managerial accounting information except:

A)the state of Michigan.
B)Google.
C)Abercrombie & Fitch.
D)H&R Block.
E)None of these responses is correct,as all of these entities would use managerial accounting information.

Question 17

Controlling involves the coordination of daily business functions within an organization.

Question 18

Measuring the performance of managers and subunits is not an objective of managerial accounting.

Question 19

Managerial accounting:

A)focuses only on historical datA.
B)is governed by GAAP.
C)focuses primarily on the needs of personnel within the organization.
D)provides information for parties external to the organization.
E)focuses on financial statements and other financial reports.

Question 20

Employee empowerment involves encouraging and authorizing workers to take initiatives to:

A)improve operations.
B)reduce costs.
C)improve product quality.
D)improve customer service.
E)All of thesE.

Question 21

Which of the following statements represents a similarity between financial and managerial accounting?

A)Both are useful in providing information for external users.
B)Both are governed by GAAP.
C)Both draw upon data from an organization's accounting system.
D)Both rely heavily on published financial statements.
E)Both are solely concerned with historical transactions.

Question 22

The two dimensions of managerial accounting are:

A)a decision-facilitating dimension and a decision-influencing dimension.
B)a decision-facilitating dimension and a financial-influencing dimension.
C)a decision-influencing dimension and a cost-minimizing dimension.
D)a cost-minimizing dimension and a profit-maximizing dimension.
E)a decision-influencing dimension and a profit-maximizing dimension.

Question 23

Which of the following would likely be considered an internal user of accounting information rather than an external user?

A)Stockholders.
B)Consumer groups.
C)Lenders.
D)Middle-level managers.
E)Government agencies.

Question 24

Managerial accountants:

A)often work on cross-functional teams.
B)are located throughout an organization.
C)are found primarily at lower levels of the organizational hierarchy.
D)are found primarily at higher levels of the organizational hierarchy.
E)choices "A" and "B" abovE.

Question 25

Which of the following employees would be considered as holding a line position?

A)Exxon Corporation's vice-president for government relations.
B)The controller of General Motors.
C)A secretary employed by Verizon Communications.
D)The manager of food and beverage services at Disney's Magic Kingdom.
E)None of thesE.

Question 26

Which of the following is not a function of the treasurer?

A)Safeguarding assets.
B)Managing investments.
C)Preparing financial statements.
D)Being responsible for an entity's credit policy.
E)Raising capital.

Question 27

Which of the following employees at Starbucks would likely be considered as holding a staff position?

A)The company's chief operating officer (COO).
B)The manager of a store located in Kansas City,Missouri.
C)The company's lead,in-house attorney.
D)The company's chief financial officer (CFO).
E)Choices "C" and "D" abovE.

Question 28

Managerial accounting has changed in recent years because of:

A)the growth of e-business.
B)increased global competition.
C)the emergence of new industries.
D)an increased focus on the customer.
E)All of these factors.

Question 29

The chief managerial and financial accountant of an organization is the:

A)chief executive officer (CEO).
B)treasurer.
C)vice-president of accounting.
D)internal auditor.
E)chief financial officer (CFO).

Question 30

Which of the following typically does not relate to the role of a controller?

A)A controller supervises the accounting department.
B)A controller safeguards an organization's assets.
C)A controller oversees the preparation of reports required by governmental authorities.
D)A controller normally assumes a narrow role within the organization,often preventing the individual's rise to top management ranks.
E)Choices "B" and "D" abovE.

Question 31

Which of the following choices correctly depicts whether McDonald's,the University of Wisconsin,and Apple Inc.would have a need for managerial accounting?

A)Choice A
B)Choice B
C)Choice C
D)Choice D
E)Choice E

Question 32

Which of the following characteristic(s)relate(s)more to managerial accounting than to financial accounting?

A)A focus on reporting to personnel within an organization.
B)A focus on reporting to external parties.
C)An area of accounting that is heavily regulated.
D)A focus on providing information that is relevant for planning,decision making,directing,and control.
E)Choices "A" and "D" abovE.

Question 33

A controller is normally involved with:

A)preparing financial statements.
B)managing investments.
C)raising capital.
D)safeguarding assets.
E)managing the firm's credit policy.

Question 34

Idaho Corporation recently implemented a just-in-time (JIT)production system along with a series of continuous improvement programs.If the firm is now considering adopting a total quality management (TQM)program,it would likely find that TQM:

A)is consistent with both JIT and continuous improvement.
B)is consistent with JIT but inconsistent with continuous improvement.
C)is consistent with continuous improvement but inconsistent with JIT.
D)is inconsistent with both JIT and continuous improvement.
E)is an antiquated management techniquE.

Question 35

Which of the following employees at Delta Airlines would not be considered as holding a line position?

A)Pilot.
B)Chief financial officer (CFO).
C)Flight attendant.
D)Ticket agent.
E)Baggage handler.

Question 36

Which of the following statement(s)about just-in-time (JIT)inventory management is (are)true?
I)The emphasis of JIT is on "pull" manufacturing.
II)Raw materials are purchased just in time to be used in production.
III)JIT is an inventory technique that focuses on reduction of both inventory and related inventory costs.

A)I only.
B)II only.
C)III only.
D)II and III.
E)I,II,and III.

Question 37

Much of managerial accounting information is based on:

A)a cost-benefit theme.
B)profit maximization.
C)cost minimization.
D)the generation of external information.
E)effectiveness but not efficiency.

Question 38

Managerial accounting has changed in recent years because of:

A)a growing service economy in the United States.
B)the growing popularity of cross-functional teams.
C)an increase in global competition.
D)time-based competition.
E)All of these factors.

Question 39

Financial accounting focuses primarily on reporting:

A)to parties outside of an organization.
B)to parties within an organization.
C)to an organization's board of directors.
D)to financial institutions.
E)for financial institutions.

Question 40

Which of the following is not normally considered to be an element of e-business?

A)E-budgeting.
B)Supply-chain management.
C)E-commerce.
D)Balanced scorecards.
E)Choices "B" and "D" abovE.

Question 41

Cost management systems tend to focus on an organization's:

A)machines.
B)employees.
C)activities.
D)customers.
E)rules and regulations.

Question 42

The capacity concept that allows for normal occurrences such as machine downtime and employee fatigue is known as:

A)practical capacity.
B)theoretical capacity.
C)utilized capacity.
D)management capacity.
E)capacity maximization.

Question 43

Which of the following choices correctly depicts activities that would be included in a manufacturer's value chain?

A)Choice A
B)Choice B Choice C
D)Choice D
E)Choice E

Question 44

Given the following information,what is the cost of unused capacity? Cost of material supplied is $8,600;Cost of material used is $8,000;Cost of material used per shelf is $8;Cost of material supplied per shelf is $8.60.

A)$600.
B)$6,000.
C)$0.60.
D)$1,000.
E)There is no unused capacity.

Question 45

The cost of resources supplied but unused is known as:

A)practical capacity costs.
B)the cost of theoretical capacity.
C)the cost of unused capacity.
D)the cost of resources supplieD.
E)capacity cost.

Question 46

Which of the following can be linked to a wave of corporate scandals that took place not too long ago?

A)Greedy corporate executives.
B)Managers who made over-reaching business deals.
C)Lack of oversight by companies' audit boards and boards of directors.
D)Shoddy work by external auditors.
E)All of thesE.

Question 47

Which of the following is not an element of competency?

A)To develop appropriate knowledge about a particular subject.
B)To perform duties in accordance with relevant laws.
C)To perform duties in accordance with relevant technical standards.
D)To refrain from engaging in an activity that would discredit the accounting profession.
E)To prepare clear reports after an analysis of relevant and reliable information.

Question 48

The value chain of a manufacturer would tend to include activities related to:

A)manufacturing.
B)research and development.
C)product design.
D)marketing.
E)All of thesE.

Question 49

The upper limit on the production of goods and services if everything works perfectly is known as:

A)practical capacity.
B)theoretical capacity.
C)utilized capacity.
D)management capacity.
E)capacity maximization.

Question 50

Which of the following statements about the ethical climate of business is false?

A)Greedy corporate executives are,in part,to blame for the rash of corporate scandals that occurred not too long ago.
B)Unethical business behavior can have a negative impact on our economy.
C)The Sarbanes-Oxley Act strives to improve the overall quality of corporate reporting.
D)The Robinson-Patman Act strives to improve the overall quality of corporate reporting.
E)Corporate scandals have served as the accounting profession's wake-up call to pay increased attention to ethical issues in the conduct of business.

Question 51

Which of the following acts strives to improve corporate governance and the quality of corporate accounting/reporting?

A)Robinson-Patman.
B)Taft-Hartley.
C)Sarbanes-Oxley.
D)Bush-Cheney.
E)Franks-Ashcroft.

Question 52

In order for a company to achieve a sustainable competitive advantage,it must perform value chain activities:

A)at the same quality level as competitors,at the same cost.
B)at the same quality level as competitors,but at a lower cost.
C)at a higher quality level than competitors,at a higher cost.
D)at a higher quality level than competitors,but at no greater cost.
E)Either choice "B" or "D" abovE.

Question 53

Given the following information,what is the cost of unused capacity? Cost of material supplied is $3,200;Cost of material used is $3,000;Cost of material used per cake is $3;Cost of material supplied per cake is $3.20.

A)$0.20.
B)$200.
C)$2,000.
D)$1,000.
E)There is no unused capacity.

Question 54

Assume that a managerial accountant regularly communicates with business associates to avoid conflicts of interest and advises relevant parties of potential conflicts.In so doing,the accountant will have applied the ethical standard of:

A)objectivity.
B)confidentiality.
C)integrity.
D)credibility.
E)unified behavior.

Question 55

A company has a bottleneck operation that slows production.Which of the following tools or approaches could the firm use to determine the most cost-effective ways to eliminate this problem?

A)Linear programming.
B)Theory of constraints.
C)Decision-tree diagrams.
D)Payoff matrices.
E)Strategic path analysis (SPA).

Question 56

Which of the preceding activities would likely not be considered part of The Gap clothing company's value chain?

A)Designing a new product line.
B)Locating and then negotiating terms with a clothing manufacturer.
C)Marketing an existing product line.
D)Distributing goods from regional warehouses to local stores.
E)All of these activities would be an element in the company's value chain.

Question 57

Kaizen costing is consistent with:

A)cost reduction.
B)continuous improvement.
C)poor quality.
D)financial accounting and income statements.
E)both choices "A" and "B" abovE.

Question 58

The activities performed by a manufacturing organization could be categorized as pre-production (such as research and development and product design),production-related,and post-production (such as marketing and customer service).Which activities should the firm focus on if management understands the value chain concept and desires to meet organizational goals?

A)Pre-production activities.
B)Production-related activities.
C)Post-production activities.
D)Choices "A","B",and "C" above.
E)Choices "A" and "B" abovE.

Question 59

The process of managing the various activities in the value chain,along with the associated costs,is commonly known as:

A)activity-based costing.
B)strategic cost management.
C)total quality management.
D)computer-integrated costing.
E)sound management practices (SMP).

Question 60

Which of the following is not an ethical standard of managerial accounting?

A)Competence.
B)Confidentiality.
C)Efficiency.
D)Integrity.
E)Credibility.

Question 61

Cross-functional teams and time-based competition are two themes of contemporary management accounting.Briefly explain these two concepts.

Question 62

The value chain is a key component of contemporary management accounting.Define the term "value chain" and explain how it would relate to an airline.

Question 63

Borders Overnight operates an overnight package delivery service that competes with Federal Express and United Parcel Service (UPS).Top management is considering the use of a balanced scorecard to evaluate operations.
A.The balanced scorecard is a business model that helps to assess a firm's competitive position and ensures that the firm is progressing toward long-term survival.Balanced scorecards differ from organization to organization;however,in addition to customer-satisfaction measures,most have a combination of financial measures,internal operating measures,and measures of innovation/growth and learning.
A.What is a balanced scorecard and other than customer-satisfaction measures,what are its typical key components?
B.Customer-satisfaction measures could include number of packages delivered,market share,number of packages lost or damaged,number of customer complaints,average wait time when calling and scheduling a package pickup,and response time to customer problems.
B.List four customer-satisfaction measures that Borders might use to evaluate performance.

Question 64

Many professions have adopted a series of ethical standards to provide guidance for their memberships.The Institute of Management Accountants (IMA),for example,has published standards that focus on competence,confidentiality,integrity,and credibility.In light of these standards,consider the three cases that follow.
Case A-Leston Corporation has experienced serious financial difficulties in recent years.John Young,the company's chief financial officer,has just learned that a major competitor was likely to file for bankruptcy;however,he failed to disclose this information at a board meeting held later that day when a plant closure decision was being discussed.The board evaluated several proposals during the session that focused on improving Leston's financial position.
Case B-QBX Company manufactures fertilizer from various raw materials,including a raw material know as Felstar.Paul Kelly,the firm's purchasing manager,purposely acquired a lower grade of Felstar than normal because of a very attractive price.The lower-grade product resulted in increased usage during the manufacturing process but had no effect on the fertilizer's overall quality.An end-of-period report showed that QBX profited from Kelly's actions,with the overall savings in purchase price more than offsetting the cost of added consumption.
Case C-Central Distributing has a participative budgeting process,allowing employees to have a say in projected sales targets for the upcoming period.These targets are reflected in a series of performance reports that compare actual sales achieved against targeted amounts.Hillary Baxter submitted very low sales targets because,as she confided in a colleague,"I always want to look good in terms of meeting targets,even if anticipated sales and closures don't materialize."
Required:
Evaluate the three cases and determine the ethical issues,if any,that are involved.Cite the IMA's standards if appropriate.

Question 65

DreamWorks Pictures produces both motion pictures for theaters as well as a variety of television series.Consider the seven activities that follow.
1.Auditions for actors and actresses
2.Development of promotional materials for use by local newspapers
3.Focus groups to evaluate ideas for potential television comedy series
4.Production of DVDs for release to Best Buy and Blockbuster Video
5.On-location shooting of scenes
6.Fine-tuning and rewrites of scripts
7.Set design and construction for a new medical drama
Required:
A.

A.Evaluate the seven activities as upstream (pre-production),production,or downstream (post-production)in nature.
B.Generally speaking,which activities (upstream,production,or downstream),if any,can management ignore if the company is to be successful in achieving its key strategic goals?
B.None.All are important and must be considereD.

Question 66

Consider the descriptors that follow.
1.Is heavily involved with the recordkeeping and reporting of assets,liabilities,and stockholders' equity.
2.Focuses on planning,decision making,directing,and control.
3.Is heavily regulated.
4.A field that is becoming more "cross-functional" in nature.
5.Much of the field is based on costs and benefits.
6.Is involved almost exclusively with past transactions and events.
7.Much of the information provided is directed toward stockholders,financial analysts,creditors,and other external parties.
8.Tends to focus more on subunits within an entity rather than the organization as a whole.
9.May become involved with measures of customer satisfaction,and the amount of actual cost incurred vs.budgeted targets.
Required:
Determine whether the descriptors are most closely associated with financial accounting or managerial accounting.

Question 67

Briefly distinguish between managerial accounting and financial accounting.Be sure to comment on the general focus,users,and regulation related to the two fields.

Question 68

Unused or excess capacity is a key component of contemporary management accounting.Define the term "excess capacity" and explain how it would relate to a coffee shop.