Question 1

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 the trend of increased strategic planning, management accountants have expanded their use of life-cycle costing beyond just manufacturing costs. They now consider the costs for the entire product life-cycle, from R&D to marketing to disposal.

Question 2

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 primarily used to link the perspectives of the balanced scorecard, which include financial, customer, internal processes, and learning and growth perspectives. It helps organizations to visualize how their objectives in each of these perspectives are aligned with their overall strategy. While it can be a useful tool in implementing strategy and organizing critical success factors, it is not its primary purpose. It may also indirectly enhance the sustainability of the organization by improving its performance in various areas.

Question 3

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 address bottlenecks in a production process, and improve the flow of products through a system. If the system is already well-balanced and there are no major bottlenecks, then the theory of constraints may not be an appropriate management technique to use. In this case, option D describes a scenario where there are no major constraints in the production process, and so the theory of constraints would not be needed. Options A, B, and C all describe situations where there are potential bottlenecks or constraints that could benefit from applying the theory of constraints.

Question 4

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 is a cost management approach that determines the maximum amount of cost that can be incurred for a product, based on the market price and desired profit. It involves analyzing customer needs and preferences, determining a target price based on market research, and then working backward to determine the target cost that will enable the company to achieve its profit margin. Therefore, the correct choice is D.

Question 5

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

Internal audit and control is not a main focus of cost management information, which primarily deals with strategic management, performance measurement, planning, decision making, and financial statement preparation.

Question 6

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 approach emphasizes the inclusion of non-financial measures in addition to financial measures. Therefore, the company should include non-financial information such as customer satisfaction, innovation, employee engagement, and other metrics that are critical to the company's long-term success. This will help the company to have a more comprehensive view of its performance and make better decisions to drive long-term success. Additional financial information may also be useful, but it is not the primary focus of the balanced scorecard approach.

Question 7

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 who purchase goods from manufacturers or other sources and sell them to retailers or other businesses. Retailers are businesses that sell products directly to consumers. Therefore, wholesalers sell to other businesses (such as retailers) while retailers sell directly to consumers.

Question 8

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 involves tracing the costs of each activity within a company to specific cost objects or products. By doing so, the accountant can allocate overhead costs more accurately and fairly based on the actual activities that require those expenses. Therefore, the best choice is for the accountant to try to trace the departments' costs to their cost objects and charge each department based on those cost relationships. This will provide a more accurate analysis of the company's cost structure and identify opportunities for cost reduction.

Question 9

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 is not necessarily a total quality management practice. While it may improve organizational structure and communication, it does not directly relate to improving product or service quality. The other options all involve practices that aim to improve quality in some way, such as reducing waste or increasing efficiency.

Question 10

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 has evolved to become a more strategic function that goes beyond traditional product costing and operational control. Today, cost management plays a crucial role in helping organizations make informed decisions and achieve long-term business objectives. As such, a strategic focus that emphasizes long-term planning and decision-making is essential to effective cost management.

Question 11

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 developing and implementing strategies that help a company achieve its goals and maintain a competitive advantage in the market. Therefore, the development of a sustainable competitive position is a key aspect of strategic management. A, C, D, and E are important elements of running a business but do not encompass the full scope of strategic management.

Question 12

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 included in the Institute of Management Accountants' Statement of Ethical Professional Practice are competence, confidentiality, integrity, and credibility. These elements ensure that management accountants maintain high ethical standards in their professional conduct. Competence ensures that management accountants have the necessary knowledge and skills to perform their duties. Confidentiality ensures that confidential information is not disclosed without authorization. Integrity ensures that management accountants are honest, truthful, and have strong moral principles. Finally, credibility ensures that management accountants are reliable and are perceived as trustworthy by their colleagues and stakeholders.

Question 13

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 is focused on offering unique or superior products or services, which sets them apart from their competitors. Therefore, a high level of production efficiency is not necessarily a critical success factor since it is not directly related to creating differentiation. The other options, such as cutting edge research and development, excellent customer service, award-winning product quality, and continually beating competitors to the market with new, innovative products, are all critical success factors for a company that competes on differentiation.

Question 14

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 managed by the Controller, who is responsible for financial management and accounting within an organization. The Chief Financial Officer and Treasurer may also be involved in cost management, but their responsibilities extend beyond just financial information. The Chief Information Officer is responsible for information technology and systems, which may include cost management software, but they typically do not have direct responsibility for managing cost information.

Question 15

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

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

Question 16

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 management technique being used in this scenario is Continuous Improvement. This involves encouraging employees to constantly make small changes to their work processes in order to increase efficiency, quality, and productivity. By rewarding employees for finding new and better ways of working, the company is motivating them to engage in this process of continuous improvement.

Question 17

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

The other options (quality and service, timeliness of delivery, ability to respond to customer's desires for specific features) are all aspects that contribute to customer value. However, the state of the art manufacturing facilities may not necessarily be a direct factor influencing customer value, although it may indirectly contribute by allowing for better production processes and higher quality products.

Question 18

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 19

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

Business process improvement involves reevaluating and reorganizing business processes in order to create competitive advantage. This can involve changing or decreasing jobs within the company to improve efficiency and effectiveness. The other options listed do not necessarily involve job changes or reorganization of the company's structure.

Question 20

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 accounting
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.

Quiz 1: Cost Management and Strategy

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

The strategy map is a tool that is used:

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

Target costing:

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

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?

The difference between wholesalers and retailers is:

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?

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

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

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

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

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

Cost management information typically is the responsibility of the:

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

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?

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

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

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?

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