Question 1

Which of the following is not a key financial manager in an organization?

Accepted Answer

While an external auditor may be hired by the organization, they are not a key financial manager within the organizational structure. The CFO, treasurer, controller, and cost accountant are all important financial managers who oversee and manage different aspects of the organization's finances.

Question 2

The system that identifies the costs of producing low-quality items is called

Accepted Answer

The system that identifies the costs of producing low-quality items is called the cost of quality. It takes into account both the cost of preventing defects (like training, equipment maintenance, quality control) and the cost of fixing defects (like rework, scrap, warranty repairs). By identifying the cost of poor quality, businesses can take steps to improve their processes and reduce waste. The other choices (A, B, C, and E) are related to different aspects of business management but do not specifically address the cost of poor quality.

Question 3

Cindy's Limo Service provides transportation services in and around Middleville.Its profits have been declining,and management is planning to add a package delivery service that is expected to increase revenue by $275,000 per year.The total cost to lease additional delivery vehicles from the local dealer is $60,000 per year.The present manager will continue to supervise all services.Due to expansion,however,the labor costs and utilities would increase by 40%.Rent and other costs will increase by 15%.
Required:
Prepare a report of the differential costs and revenues if the delivery service is added.Should management start up the delivery service? Explain your answer.

Accepted Answer

The answer of Cindy's Limo Service provides transportation services in...

Question 4

Moving of inventory is an example of a(n)

Accepted Answer

Moving of inventory does not add any value to the product or service and is therefore considered a nonvalue-added activity.

Question 5

A management method by which the organization seeks to excel on all dimensions of quality is called

Accepted Answer

Total Quality Management (TQM) is a management approach aimed at achieving excellence in all dimensions of quality, including customer satisfaction, employee satisfaction, profitability, and shareholder value. It involves continuous improvement efforts, employee involvement, and a focus on meeting or exceeding customer expectations. TQM is a holistic approach that encompasses all aspects of an organization's operations, from product design to delivery and customer service.

Question 6

Northern King is an integrated provider of genetically engineered corn.Many types of costs are incurred in its operations.
Required: For each cost in the following table,identify the stage in the value chain where the cost is incurred.

Accepted Answer

The answer of Northern King is an integrated provider of...

Question 7

Which of the following is not normally considered part of the value chain?

Accepted Answer

Administration is typically considered a support function rather than a direct part of the value chain. The primary activities in the value chain include inbound logistics, operations, outbound logistics, marketing and sales, and service. Research and development, purchasing, distribution, and customer service are all parts of the value chain.

Question 8

Information technology that links the various processes of the company into a single comprehensive information system is called

Accepted Answer

The information technology referred to in the question is describing enterprise resource planning (ERP) systems. These systems integrate various processes of a company, such as finance, human resources, and supply chain management, into a single comprehensive information system. Customer relationship management (A) focuses specifically on managing relationships with customers, while distribution chain (B) refers to the flow of goods and services from supplier to customer. Total quality management (C) is a management philosophy focused on continuous improvement of products and processes, and cost of quality (D) refers to the costs associated with maintaining quality standards in a product or service.

Question 9

The system that allows firms to target profitable customers by assessing customer revenue and costs is called

Accepted Answer

Customer relationship management (CRM) involves using data analysis to understand customer behavior and preferences, in order to improve customer retention and drive sales growth. By assessing customer revenue and costs, firms can identify which customers are most profitable and target their marketing efforts accordingly. This system is a key component of effective CRM strategies.

Question 10

Having one or more of the firms' activities performed by another firm or individual in the supply or distribution chain is called

Accepted Answer

Outsourcing involves having another firm or individual perform one or more activities in the supply or distribution chain. Lean accounting refers to a simplified accounting system that focuses on value-added activities, responsibility centers are organizational units responsible for specific tasks or functions, activity-based costing is a costing method that assigns costs to specific activities within an organization, and budgeting involves making financial plans and allocating resources.

Question 11

Compare financial accounting and cost accounting using the following concepts: users of the information; important criteria; who establishes or defines the system; and how to determine an accounting treatment.

Accepted Answer

The answer of Compare financial accounting and cost accounting using...

Question 12

The IMA Code of Ethics describes three basic steps a cost accountant should take when faced with an ethical conflict: Discuss,clarify,consult.Describe each of these three steps.

Accepted Answer

The answer of The IMA Code of Ethics describes three...

Question 13

Honda incurs many types of costs in its operations.
Required: For each cost in the following table,identify the stage in the value chain where the cost is incurred.

Accepted Answer

The answer of Honda incurs many types of costs in...

Question 14

Costs that change in response to a particular course of action are

Accepted Answer

Differential costs are costs that change in response to a particular course of action. These costs are useful in decision-making because they help to determine the potential benefits or drawbacks of a particular course of action. Cost-benefit analysis is a broader concept that incorporates differential costs but also considers the potential benefits of a particular course of action. Activity-based costs and cost drivers are related concepts but do not specifically refer to costs that change in response to a particular course of action.

Question 15

Respond to this comment: "Since cost accountants just prepare accounting data for internal management,cost accountants do not need to be concerned with GAAP or IFRS."

Accepted Answer

The answer of Respond to this comment: "Since cost accountants...

Question 16

In 2010,the MoreForLess Company had revenues of $2,000,000 while costs were $1,500,000.In 2011,MoreForLess will be introducing a new product line that will generate $200,000 in sales revenues and $160,000 in costs.Assuming no changes are expected for the other products,the differential operating profit for 2011 is

Accepted Answer

The differential operating profit is the difference between the additional revenues and additional costs from the new product line, which is $200,000 - $160,000 = $40,000.

Question 17

In 2010,the Turnkey Company had consulting revenues of $1,000,000 while costs were $750,000.In 2011,Turnkey will be introducing a new service that will generate $150,000 in sales revenues and $60,000 in costs.Assuming no changes are expected for the other services,the differential operating profit for 2011 is

Accepted Answer

To calculate the differential operating profit for 2011, we need to subtract the costs from the revenues.

For 2010:

Operating profit = Revenues - Costs 
Operating profit = $1,000,000 - $750,000 
Operating profit = $250,000

For 2011:

Operating profit = Revenues - Costs 
Operating profit = ($1,000,000 + $150,000) - ($750,000 + $60,000) 
Operating profit = $1,150,000 - $810,000 
Operating profit = $340,000

Now, to find the differential operating profit, we need to subtract the 2010 operating profit from the 2011 operating profit:

Differential operating profit = 2011 operating profit - 2010 operating profit 
Differential operating profit = $340,000 - $250,000 
Differential operating profit = $90,000

Therefore, the correct answer is C) $90,000.

Quiz 1: Cost Accounting: Information for Decision Making