Question 1

When managers produce value for the customer, their orientation consists of all the following except:
A)Quality and Service.
B)Timeliness of delivery.
C)The ability to respond to the customer's desire for specific features.
D)State of the art manufacturing facilities.

Accepted Answer

State of the art manufacturing facilities is not a part of a manager's orientation when producing value for the customer. The other options listed (quality and service, timeliness of delivery, and ability to respond to specific features) are all important considerations for producing value for the customer.

Question 2

Target costing:
A)Determines cost based on an expected market demand for the product.
B)Determines cost based on a budget.
C)Determines cost based on standard cost.
D)Determines cost based upon market price and desired profit.

Accepted Answer

Target costing determines cost based upon market price and desired profit. It involves first determining the selling price based on competition and market demand, then subtracting the desired profit margin to determine the target cost. The company then works to design and manufacture the product at a cost that allows them to meet the target cost and still earn the desired profit.

Question 3

The five steps of strategic decision making include all of the following except:
A)Identify the alternative actions.
B)Gather, summarize, and report accounting information.
C)Determine the strategic issues surrounding the problem.
D)Choose and implement the desired alternative.
E)Provide an ongoing evaluation of the effectiveness of implementation.

Accepted Answer

Gathering, summarizing, and reporting accounting information is not one of the five steps of strategic decision making. The other four steps include: identifying alternative actions, determining strategic issues, choosing and implementing the desired alternative, and providing an ongoing evaluation of the effectiveness of implementation.

Question 4

The Institute of Management Accountants' Statement of Ethical Professional Practice for management accountants includes the elements of:
A)Competence, confidentiality, integrity, and relevance.
B)Competence, confidentiality, integrity, and credibility.
C)Competence, confidentiality, independence, and objectivity.
D)Competence, accuracy, integrity, and independence.

Accepted Answer

The correct elements for the Statement of Ethical Professional Practice for management accountants are competence, confidentiality, integrity, and credibility. Choice A includes relevance, which is not one of the elements. Choice C includes independence and objectivity, which are also important ethical principles, but not included in the Institute of Management Accountants' Statement. Choice D includes accuracy instead of credibility.

Question 5

In a local factory, employees are rewarded for finding new and better ways of changing the way they work. This company is motivating its employees to use what management technique?
A)Benchmarking.
B)Activity-Based Costing.
C)Theory of Constraints.
D)Continuous Improvement.
E)Total Quality Management.

Accepted Answer

The company is using the technique of Continuous Improvement by rewarding employees for finding new and better ways of changing the way they work. This is a key principle of continuous improvement, which involves constantly looking for ways to improve processes and increase efficiency.

Question 6

Which of the following is not a contemporary management technique used by the management accountant to focus on process improvement?
A)Enterprise risk management
B)Lean manufacturing
C)Life cycle costing
D)Enterprise sustainability

Accepted Answer

Life cycle costing is not primarily focused on process improvement but rather on assessing the total cost of ownership of a product from acquisition through disposal. The other options, such as enterprise risk management, lean accounting, and enterprise sustainability, are contemporary management techniques that include a focus on improving processes within an organization.

Question 7

Which of the following does not represent a main focus of cost management information?
A)Strategic management.
B)Performance measurement.
C)Planning and decision making.
D)Preparation of financial statements.
E)Internal audit and control.

Accepted Answer

The answer of Which of the following does not represent...

Question 8

The strategy map is a tool that is used
A)as one of the key aspects of the contemporary management environment
B)to enhance the sustainability of the organization
C)to link the perspectives of the balanced scorecard
D)to organize the critical success factors of a company
E)to implement strategy

Accepted Answer

The strategy map is used to link the perspectives of the balanced scorecard, which is a performance management tool used to align business activities to the vision and strategy of the organization. The other options are either too broad (A) or too specific (B, D, E) to encompass the full purpose and scope of the strategy map.

Question 9

Cost management information typically is the responsibility of the:
A)Chief Financial Officer.
B)Controller.
C)Treasurer.
D)Chief Information Officer.

Accepted Answer

Cost management information is usually handled by the controller who is responsible for overseeing the accounting and finance functions of the organization including budgeting, cost accounting, and financial reporting. While the CFO and treasurer may be involved in overseeing financial management as a whole, the controller typically has more direct responsibility for cost management. The chief information officer (CIO) is responsible for overseeing the organization's technology and information systems, which may include financial systems, but does not necessarily have direct responsibility for cost management information.

Question 10

A local area consulting firm is trying to increase the long-term strategic focus of its company reports. Therefore, the firm has decided to use the balanced scorecard. What type of new information, that the company currently doesn't use in its financial reports, should the company include?
A)Non-financial information, including customer satisfaction, innovation, etc.
B)Additional financial information, such as profitability measures and market value.
C)Product life cycle information.
D)Supplemental accounting reports
E)Continuous improvement

Accepted Answer

The balanced scorecard is designed to provide a more comprehensive view of a company's performance beyond just the financial perspective. Therefore, including non-financial information such as customer satisfaction, innovation, etc. would provide a more complete view of the company's long-term strategic focus.

Question 11

Target costing determines the desired cost for a product upon the basis of a given competitive price such that the product will:
A)Earn at least a small profit.
B)Earn a desired profit.
C)Earn the maximum profit.
D)Break even.
E)Sell the highest volume.

Accepted Answer

Target costing is used to determine the cost at which a product can be sold at a desired profit margin. Therefore, the desired profit is the key factor considered in target costing, making option B the best choice. Option A is incorrect because earning a small profit may not be enough to cover all costs and support the business. Option C is incorrect because the goal of target costing is not to earn the maximum profit, but to earn a desired profit while remaining competitive. Option D is incorrect because break even is not the ultimate goal of target costing, but rather to earn a profit. Option E is incorrect because selling the highest volume may not necessarily result in the desired profit margin.

Question 12

A practical example of when the theory of constraints would not be an appropriate management technique to use would be:
A)Long lines at checkout stands.
B)Busy signals on Internet server sites.
C)One critical production process provides 60 parts/min. output, compared with a company-wide output of 90 parts/min.
D)Balanced, fast movement of the product through the plant.

Accepted Answer

The theory of constraints is designed to identify and improve the bottleneck in a system or process. If the production process is already balanced and fast-moving, then there may not be a clear bottleneck to target for improvement using this technique. Therefore, D would not be an appropriate situation to apply the theory of constraints. A, B, and C all involve identifiable bottlenecks or constraints that could benefit from the application of the theory of constraints.

Question 13

Cost management has moved from a traditional role of product costing and operational control to a broader strategic focus, which places an emphasis on:
A)Competitive pricing.
B)Domestic marketing.
C)Short-term thinking.
D)Strategic thinking.
E)Independent judgment.

Accepted Answer

Cost management is now more focused on strategic thinking, as companies must consider long-term value creation and competitive advantage. This involves analyzing costs across the entire value chain and making decisions that align with the company's overall strategy.

Question 14

The difference between wholesalers and retailers is:
A)Wholesalers are merchandisers that sell directly to customers whereas retailers are merchandisers that sell to other merchandisers.
B)Wholesalers are merchandisers that sell to other merchandisers whereas retailers are merchandisers that sell directly to consumers.
C)Wholesalers are merchandisers that sell directly to the government whereas retailers are merchandisers that sell to other merchandisers.
D)Wholesalers are merchandisers that sell directly to customers whereas retailers are merchandisers that sell directly to the government.
E)There is no difference between wholesalers and retailers.

Accepted Answer

Wholesalers are intermediaries between manufacturers and retailers. They buy goods in bulk from manufacturers and sell smaller quantities to retailers, who then sell to the end consumers. Retailers sell goods directly to the consumers. Therefore, option B is the correct answer.

Question 15

If a firm decided to reevaluate and reorganize the way it did business, in hopes of creating competitive advantage, by changing or decreasing jobs, the company would be using which of the following management technique?
A)The value chain.
B)Business intelligence.
C)Business process improvement.
D)Product reevaluation.
E)Life cycle costing.

Accepted Answer

The technique of reevaluating and reorganizing the way a company does business in order to create competitive advantage is called business process improvement. This can involve changing or decreasing jobs in order to streamline processes and increase efficiency. The other options listed do not specifically address this type of restructuring.

Question 16

A company's management accountant is trying to improve the way costs are allocated within the company. Currently, several corporate expenses are grouped together and labeled "overhead." If the accountant wanted to use activity-based costing (ABC) to help solve the problem, what should she do?
A)She should try to trace the departments' costs to their cost objects, and then charge each department based on those cost relationships.
B)She should research how the company's competitors are allocating their costs, and then implement one of those strategies.
C)She should look for bottlenecks within the production process, and try to eliminate them, thus reducing costs.
D)She should examine the firm's value chain and apply target costing before adopting ABC.

Accepted Answer

Activity-based costing (ABC) is a method of allocating costs based on the activities that caused those costs. To use ABC, the company first identifies the specific activities that drive the costs, and then traces those costs to the cost objects that are responsible for creating the need for those activities. In other words, the management accountant should look at the specific activities that make up the overhead costs currently being allocated, and allocate those costs to the departments that are responsible for causing those activities. This will provide a more accurate picture of the costs incurred by each department and will also allow for better decision-making regarding cost reduction or optimization.

Question 17

In keeping with the current trend of increased strategic planning, how have management accountants changed their use of life-cycle costing?
A)They have now shifted their focus from R&D costs to marketing and promotion costs.
B)They have turned from a sole focus on manufacturing costs to a much wider outlook, taking into account costs from the entire product life-cycle.
C)They stopped looking at the entire life-cycle, and now focus their attention on product design costs.
D)Accountants don't use life-cycle costing, that task is left for the operations manager.

Accepted Answer

With increased strategic planning, management accountants have shifted from a sole focus on manufacturing costs to a wider outlook, taking into account costs from the entire product life-cycle. This includes costs related to R&D, marketing, distribution, and disposal.

Question 18

Strategic management can be defined as the development of a sustainable:
A)Chain of command.
B)Competitive position.
C)Cash flow.
D)Business entity.
E)Company image.

Accepted Answer

Strategic management involves the process of analyzing and creating a competitive position for a business entity in the marketplace. This includes identifying sustainable advantages and developing strategies to leverage those advantages for long-term success. Therefore, the most appropriate choice is B, competitive position.

Question 19

All of the following are examples of total quality management practices except:
A)Redesign of a product to reduce its parts by 50 percent.
B)Reduction in the movement required in a manufacturing job.
C)Separating the sales and services functions.
D)Raising raw material quality standards.
E)Cross-training assembly line workers to cover sick leave absences.

Accepted Answer

Separating the sales and services functions does not necessarily relate to total quality management practices. The other options all involve a focus on product/process improvement, increased efficiency, or improved standards, which are key elements of TQM.

Question 20

Which of the following aspects of a company would not be considered a critical success factor, for a company that competes on differentiation?
A)Cutting edge research and development.
B)Excellent customer service.
C)Award-winning product quality.
D)Continually beating competitors to the market with new, innovative products.
E)A high level of production efficiency

Accepted Answer

A company that competes on differentiation focuses on offering unique and distinct products or services in the market. High production efficiency may not be considered a critical success factor since the company's focus is not on cost leadership but rather on offering unique value propositions to customers.

Quiz 1: Cost Management and Strategy

When managers produce value for the customer, their orientation consists of all the following except:

Target costing:

The five steps of strategic decision making include all of the following except:

The Institute of Management Accountants' Statement of Ethical Professional Practice for management accountants includes the elements of:

In a local factory, employees are rewarded for finding new and better ways of changing the way they work. This company is motivating its employees to use what management technique?

Which of the following is not a contemporary management technique used by the management accountant to focus on process improvement?

Which of the following does not represent a main focus of cost management information?

The strategy map is a tool that is used

Cost management information typically is the responsibility of the:

A local area consulting firm is trying to increase the long-term strategic focus of its company reports. Therefore, the firm has decided to use the balanced scorecard. What type of new information, that the company currently doesn't use in its financial reports, should the company include?

Target costing determines the desired cost for a product upon the basis of a given competitive price such that the product will:

A practical example of when the theory of constraints would not be an appropriate management technique to use would be:

Cost management has moved from a traditional role of product costing and operational control to a broader strategic focus, which places an emphasis on:

The difference between wholesalers and retailers is:

If a firm decided to reevaluate and reorganize the way it did business, in hopes of creating competitive advantage, by changing or decreasing jobs, the company would be using which of the following management technique?

A company's management accountant is trying to improve the way costs are allocated within the company. Currently, several corporate expenses are grouped together and labeled "overhead." If the accountant wanted to use activity-based costing (ABC) to help solve the problem, what should she do?

In keeping with the current trend of increased strategic planning, how have management accountants changed their use of life-cycle costing?

Strategic management can be defined as the development of a sustainable:

All of the following are examples of total quality management practices except:

Which of the following aspects of a company would not be considered a critical success factor, for a company that competes on differentiation?