Question 1

Generally, companies follow one of two broad strategies: offering a quality product at a low price, or offering a unique product or service priced higher than the competition. Assume you are opening a small food outlet across the street from your campus. How might that business be operated under each of the two broad strategies? Consider the following specific operational areas:
a. target customers
b. products offered
c. product pricing
d. location choice
e. advertising content
f. advertising media

Accepted Answer

The purpose of this question is to explore some of the differences in business operations as a result of a broad strategic choice. Answers will differ from student to student, but you should see some specific themes.

Question 2

Which of the following is TRUE concerning the value chain of business functions?

Accepted Answer

The value chain concept emphasizes the importance of each part of the business process in adding value to the product or service, and senior managers from each part of the value chain indeed have a responsibility in resource allocation, usage, and reward distribution, contributing to the overall strategy and efficiency of the organization.

Question 3

Cyclone Car Company tries to assign appropriate responsibilities to all of its managers. Production managers receive reports which accumulate information of the shop operations for each plant. Plant operations are further aggregated in the report received by the vice president of manufacturing. These reports show the budgeted and actual operating results for the current month and year-to-date. These, along with inventory status reports, provide the major source of production information for the next planning period. Managers evaluate the variances between actual and budgeted amounts and determine whether operations are in or out of control. If variances are large, appropriate action is taken, i.e., the plans are changed.
The company's profits have been decreasing, and management has requested similar aggregate sales data from marketing. It is felt that this added information will suffice for its decision-making needs.
Required:
Do you agree? Why? Do you foresee any needs that will not be met by this information? If so, what additional information do you suggest that management be provided by the management accounting system?

Accepted Answer

The operating and variance information received by management of Cyclone Car is only a part of the total information set required to make managerial decisions which deal with the efficient allocation of the firm's resources in accordance with the policies and goals of the firm. The firm's collection of information needs to be expanded to encompass external market and economic information, analysis of causes of unacceptable variances, and evaluations of production efficiency using measures other than dollars (for example, quality). Also, student may provide metrics that support KSFs.

Question 4

Classify each cost item into one of the business functions of the value chain listed.
-cost of samples mailed to promote sales of a new product

Accepted Answer

The cost of samples mailed to promote sales of a new product falls under marketing, as it is a promotional activity aimed at generating interest and sales for the product.

Question 5

Classify each cost item into one of the business functions of the value chain listed.
-labour cost of workers in the manufacturing plant

Accepted Answer

Labour cost of workers in the manufacturing plant directly relates to the production function of the value chain, as it involves the creation and assembly of the company's products.

Question 6

Classify each cost item into one of the business functions of the value chain listed.
-bonus paid to a person with a 90% satisfaction rating in handling customers with complaints

Accepted Answer

The bonus paid to a person for handling customers with complaints falls under customer service, as it directly relates to managing and improving the customer experience.

Question 7

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed.
-cost of customer order forms

Accepted Answer

The cost of customer order forms is associated with marketing, as these forms are used to facilitate sales and communicate with customers.

Question 8

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed.
-cost of paper used in manufacture of books

Accepted Answer

The cost of paper used in the manufacture of books directly relates to the production function, as it is a material cost involved in creating the product.

Question 9

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed.
-cost of paper used in packing cartons to ship books

Accepted Answer

The cost of paper used in packing cartons to ship books is associated with the distribution function, as it is a cost related to preparing and delivering the product to the customer.

Question 10

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed.
-cost of paper used in display at national trade show

Accepted Answer

The cost of paper used in a display at a national trade show falls under marketing, as it is a promotional activity aimed at advertising or presenting the books to potential buyers or distributors.

Question 11

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed.
-amortization of delivery trucks

Accepted Answer

Amortization of delivery trucks is associated with the distribution function, as these trucks are used to distribute the finished products to retailers or customers.

Question 12

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed.
-amortization of the wood used in the manufacturing plant

Accepted Answer

The amortization of the wood used in the manufacturing plant is directly related to the production process of manufacturing books, hence it falls under the production function in the value chain.

Question 13

Johnson Advertising Agency incurs the following costs in its service activities. Match each one of them to one of the value chain functions listed.
-amortization of the artist design desk

Accepted Answer

The amortization of the artist design desk is directly related to the design of products, services, and processes, as it is an expense associated with the tools used in the creative design phase.

Question 14

Johnson Advertising Agency incurs the following costs in its service activities. Match each one of them to one of the value chain functions listed.
-cost of computer time used to create designs for customers

Accepted Answer

The cost of computer time used to create designs for customers directly relates to the design of products, services, and processes, as it involves the creative process of designing the advertising content or strategy for the client.

Question 15

Johnson Advertising Agency incurs the following costs in its service activities. Match each one of them to one of the value chain functions listed.
-cost of updating an ad for a customer

Accepted Answer

The answer of Johnson Advertising Agency incurs the following costs...

Question 16

Johnson Advertising Agency incurs the following costs in its service activities. Match each one of them to one of the value chain functions listed.
-cost of computer time used by a salesperson

Accepted Answer

The cost of computer time used by a salesperson is directly related to marketing activities, as it involves promoting and selling the company's services.

Question 17

Johnson Advertising Agency incurs the following costs in its service activities. Match each one of them to one of the value chain functions listed.
-cost of materials used in the layout of a customer's magazine ad

Accepted Answer

The cost of materials used in the layout of a customer's magazine ad is a production cost.

Question 18

Jayhawk Basketballs manufactures and distributes rebounding equipment. The company is having a problem coordinating its marketing and production efforts. Every time marketing has a special promotion in a certain part of the country, production either cannot deliver the products or distribution has them in the wrong part of the country. In addition, the company has had several production stoppages due to insufficient raw material stock at the manufacturing plant.
Required:
In terms of the information system, what appears to be the main problems? What action can be taken to improve the situation?

Accepted Answer

The answer of Jayhawk Basketballs manufactures and distributes rebounding equipment....

Question 19

Match each independent statement with the appropriate use of feedback.
-Quality control activities have been moved from the end of the assembly line to critical points along the assembly line.

Accepted Answer

This statement describes a change in operational processes, indicating a shift in how the company conducts its quality control activities by integrating them throughout the production process rather than only at the end. This is an example of changing how the company operates.

Question 20

Match each independent statement with the appropriate use of feedback.
-Home office changes stock option plans.

Accepted Answer

Changing stock option plans directly impacts the reward systems within a company, as stock options are a form of compensation used to reward employees.

Quiz 1: The Accountants Vital Role in Decision Making

Which of the following is TRUE concerning the value chain of business functions?

Classify each cost item into one of the business functions of the value chain listed. -cost of samples mailed to promote sales of a new product

Classify each cost item into one of the business functions of the value chain listed. -labour cost of workers in the manufacturing plant

Classify each cost item into one of the business functions of the value chain listed. -bonus paid to a person with a 90% satisfaction rating in handling customers with complaints

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed. -cost of customer order forms

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed. -cost of paper used in manufacture of books

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed. -cost of paper used in packing cartons to ship books

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed. -cost of paper used in display at national trade show

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed. -amortization of delivery trucks

Hardcover Company incurs the following costs when it manufactures books. Match each one of them to one of the value chain functions listed. -amortization of the wood used in the manufacturing plant

Johnson Advertising Agency incurs the following costs in its service activities. Match each one of them to one of the value chain functions listed. -amortization of the artist design desk

Johnson Advertising Agency incurs the following costs in its service activities. Match each one of them to one of the value chain functions listed. -cost of computer time used to create designs for customers

Johnson Advertising Agency incurs the following costs in its service activities. Match each one of them to one of the value chain functions listed. -cost of updating an ad for a customer

Johnson Advertising Agency incurs the following costs in its service activities. Match each one of them to one of the value chain functions listed. -cost of computer time used by a salesperson

Johnson Advertising Agency incurs the following costs in its service activities. Match each one of them to one of the value chain functions listed. -cost of materials used in the layout of a customer's magazine ad

Match each independent statement with the appropriate use of feedback. -Quality control activities have been moved from the end of the assembly line to critical points along the assembly line.

Match each independent statement with the appropriate use of feedback. -Home office changes stock option plans.