Accounting Final - Chapters 7,8,9 and 10 - Study Questions from MAL and in class Jeopardy

What are the two essential elements of empowering employees in MACS design?

1. Allowing employees to participate in decision making 2. Ensuring that employees understand the information they are using and generating (and being evaluated on)

Provide and explain the two task control categories.

1. Preventive control - Little discretion in performing a task; possibly performed by machine or computer 2. Monitoring - Inspecting the work or behavior of employees while they are performing a task (listening or camera surveillance)

What are the two broad technical characteristics that designers of MACS must address? How do they measure these characteristics?

1. Relevance of the information generated - Accurate - Timely - Consistent - Flexible Scope of the system - Comprehensive

How is a​ just-in-time manufacturing system different from a conventional manufacturing​ system? A. In a​ just-in-time system a good or service is produced or delivered only when a customer requires​ it, whereas in a conventional system goods are produced to a production schedule that may not be directly tied to when customers require the goods. B. A​ just-in-time system has larger​ inventories, whereas a conventional system has smaller inventories. C. A​ just-in-time system requires product layout with a continuous flow once production​ starts, whereas a conventional system is a continuous improvement of eliminating or reducing​ delay, error and waste. D. A​ just-in-time system has higher cycle time of manufacturing​ products, whereas a conventional system always has a constant supply of products making​ work-in-process smaller on the financials.

A

In which stage of the total life cycle of a product is target costing most​ applicable? A. Target costing is most applicable during the​ research, development and engineering​ (RD&E) stage. B. Target costing is most applicable during the manufacturing stage. C. Target costing is most applicable during the postsale service and disposal stage. D. None of the above.

A

What are the similarities and differences between​ what-if and sensitivity​ analyses? A. Both use the same model to evaluate future alternatives.​ However, what-if analysis uses a model to predict the results of varying that models key parameters or estimates and sensitivity analysis selectively varies key estimates of a plan or a budget to identify over what range a decision option is preferred. B. Both use the same model to evaluate future​ alternatives, however​ what-if analysis gives organizations a budget to​ follow, and sensitivity analysis is a process that uses a model to predict the results of varying key parameters or estimates. C. Both approach analysis of data the​ same, making the results​ identical, however​ what-if analysis is the process of selecting key estimates of a plan and comparing it to a range of​ decisions, and sensitivity analysis enables planners to identify estimates critical to the decision under consideration. D. Both evaluate the same data of an​ organization, however sensitivity analysis relies on a model tested through​ what-if analysis making it more detailed by design.

A

What does control refer to in the context of a management accounting and control​ system? A. Control refers to the set of​ procedures, tools, performance​ measures, systems and incentives that organizations use to guide and motivate all employees to achieve organizational objectives. B. Control refers to the methods and procedures used to manage production costs. C. Control refers to the action managers expect from staff in the management accounting system. D. Control refers to the methods and procedures used to maintain product quality.

A

What is a stretch​ target? A. A stretch target is one that exceeds a previous target by a significant amount and usually requires an enormous increase in effort to achieve. B. A stretch target is one where in the long run a company can sustain a budget with a high level of effort and time. C. A stretch target is a motivating type of​ budget, where targets are perceived as​ ambitious, and attainable. D. None of the above.

A

What is gain​ sharing? A. Gain sharing is a cash bonus incentive compensation plan where the total of all cash bonuses paid to all employees is determined by a formula involving performance relative to some target. B. Gain sharing is a cash bonus calculated as a percentage of an​ organization's reported profit. C. Gain sharing usually applies to one individual within an organization or unit. D. Gain sharing is a cash bonus calculated as a percentage of an​ organization's reported profit that applies to one individual within an organization or unit.

A

What is group​ technology? A. It involves the organization of a plant into a number of cells. B. It increases production cycle time needed for manufacturing products. C. It allows for machines to be in a layout that is inflexible and cannot be adjusted easily to make different products. D. None of the above.

A

What is the difference between flexible and​ capacity-related resources? A. Flexible resources are those that vary with the activity level of the firm or organization.​ Capacity-related resources do not change with the activity level. B. Flexible resources are those that vary with the activity level of the of the firm or organization.​ Capacity-related resources change with​ management's discretion. C. Flexible resources change with​ management's discretion.​ Capacity-related resources vary with the activity level of the firm or organization. D. Flexible resources do not change with the activity level.​ Capacity-related resources change with​ management's discretion.

A

What is the most motivating type of budget with respect to​ targets? A. A tight​ budget, or those with targets that are perceived as​ ambitious, but attainable. B. A stretch​ budget, one where an organization will try to reach much higher goals with the current budget. C. A participative​ budget, or those with targets that require enormous increase in budgets. D. None of the above.

A

What is​ benchmarking? Why is it​ used? A. Benchmarking is a process in which organizations gather information concerning the best practices of others in order to meet or exceed the benchmark. Benchmarking is highly effective because organizations save time and money by avoiding mistakes that other organizations have made or by not reinventing a process or method that other companies have already developed and tested. B. Benchmarking is a process where organizations gather information about other​ organization's marketing strategies. This is highly effective because organizations can take this information and help meet or exceed their​ product's success. C. Benchmarking is a way to test the abilities of staff and management teams within a company. It is used to ensure customer service is being upheld within the company. D. None of the above.

A

Which of the following incentive compensation plans can be based on individual, as opposed to group, performance? A. Cash bonus B. Profit sharing C. Stock options D. Gainsharing

A

In management accounting, control is a set of ____ that organizations use to guide employees to achieve objectives.

A. Procedures B. Tools C. Performance measures D. Systems E. Incentives F. All of the above---correct answer

Describe the lean manufacturing approach. A. Lean manufacturing looks at cost versus benefit when deciding what is best for the company. B. This approach views any resource spending that does not create value for the end customer to be​ wasteful, and therefore must be eliminated. C. This approach uses a product layout with a continuous​ flow, one with no delays once production starts. D. None of the above.

B

What does the breakeven time​ (BET) metric for the product development process​ measure? A. It is a measurement showing the comprehensive approach to profit planning and cost management. B. It measures the length of time from the​ product's beginning until the product has been introduced and generated enough profit to pay back the investment originally made in its development. C. It measures the difference between​ research, development, and engineering cycle​ (RD&E) and the postsale service and disposal stage of the​ total-life-cycle of a product. D. None of the above.

B

What is kaizen​ costing? A. A way to meet the cost standard of a company while avoiding favorable variances by comparing actual to standard costs. B. A method to reduce the cost of a product through​ small, continuous improvements during the manufacturing stage of the total life cycle of a product. C. A ratio of a target reduction amount to the cost base. D. A method of costing that assumes engineers and managers have the best technical expertise to oversee workers and thereby improve processes.

B

What is the difference between committed costs and incurred​ costs? A. Committed costs are the actual costs that the organization has paid out over the three major stages of the product life cycle. Incurred costs are those that the organization agrees must be set aside to cover product costs through the three major stages of the life cycle. B. Committed costs are those that the organization agrees must be set aside to cover product costs through the three major stages of the life cycle. Incurred costs are the actual costs that the organization has paid out over the three major stages of the product life cycle. C. Committed costs are the actual costs that the organization has paid out over the three major stages of the product life cycle. Incurred costs are those that are put aside for the​ research, development and engineering​ (RD&E) cycle of a product life. D. Committed costs are costs that are put aside for the​ research, development and engineering​ (RD&E) cycle of a product life. Incurred costs are those that the organization agrees must be set aside to cover product costs through the three major stages of the life cycle.

B

What is the single most important factor in making major changes to an organization? A: Having employee support B: Having top management support C: Maintaining a static balanced scorecard D: Communicating the changes to shareholders

B

What is the single most important factor in making major changes to an​ organization? A. To have the best customer service while the changes take place. B. To have top management support during the change. C. To keep marketing up so customers know the change will not affect production. D. To ensure the highest financial profit continues to exist throughout the change.

B

What two broad technical considerations must designers of management and control systems​ address? A. The relevance of the information generated and the decision making of managers. B. The relevance of the information generated and the scope of the system. C. The development of managerial views on motivation and the scope of the system. D. The decision making of managers and the scope of the system.

B

Which of the following types of budgets empowers employees the most? A. Authoritative B. Participative C. Consultative D. None of the above

B

Budgeting allows an organization to identify potential problems so that plans can be developed to avoid these problems or to deal with them systematically. Select an example of how budgeting might serve this role in a company that buys vegetables and cans them. A. Budgeting for crop failure based on extraordinary weather patterns. B. Planning for government intervention following an unexpected market decline. C. Planning to acquire the funds needed to meet a cyclical investment in inventory due to anticipated growing seasons. D. All of the above.

C

Task control is most effective in which of the following situations: A: When organization members understand the organization's objectives and their contribution to those objectives B: When organization members have the knowledge and skill to respond to changing situations by taking corrective actions and making sound decisions C: When the organization can control its environment and eliminate uncertainty and the need for judgment. D: When the performance measurement system is designed to assess individual contributions so that an individual can be motivated to take action and make decisions that reflect his or her own and the organization's best interests.

C

What are some examples of explicit and implicit environmental​ costs? A. Explicit environmental costs include the direct costs of modifying technology and​ processes, costs of cleanup and​ disposal, costs of permits to operate a​ facility, employee education and​ awareness, and the loss of goodwill if environmental disasters occur. Implicit environmental costs include legal​ counsel, administration, fines levied by government​ agencies, and litigation fees. B. Explicit environmental costs include legal​ counsel, administration, employee education and​ awareness, and the loss of goodwill if environmental disasters occur. Implicit environmental costs include the direct costs of modifying technology and​ processes, costs of cleanup and​ disposal, costs of permits to operate a​ facility, fines levied by government​ agencies, and litigation fees. C. Explicit environmental costs include the direct costs of modifying technology and​ processes, costs of cleanup and​ disposal, costs of permits to operate a​ facility, fines levied by government​ agencies, and litigation fees. Implicit environmental costs include legal​ counsel, administration, employee education and​ awareness, and the loss of goodwill if environmental disasters occur. D. Explicit environmental costs include fines levied by government​ agencies, and litigation​ fees, legal​ counsel, and administration. Implicit environmental costs include employee education and​ awareness, the loss of goodwill if environmental disasters​ occur, the direct costs of modifying technology and​ processes, costs of cleanup and​ disposal, and costs of permits to operate a facility.

C

What are the three key dimensions of​ motivation? A. Intensity, performance​ rewards, and consequences. B. Direction, persistence, and performance rewards. C. Direction, intensity, and persistence. D. ​Intensity, consequences, and performance rewards.

C

What are the three major stages of the​ total-life-cycle costing approach in a manufacturing​ situation? A. ​(1) Product​ design, (2)​ manufacturing, and​ (3) post-sale service and disposal. B. (1) Research, development and engineering​ (RD&E), (2) product​ design, and​ (3) product development. C. (1) Research, development and engineering​ (RD&E), (2)​ manufacturing, and​ (3) post-sale service and disposal. D. (1) Product​ design, (2) product​ development, and​ (3) manufacturing.

C

What are the two general methods of information gathering and sharing when undertaking a benchmarking​ exercise? A. Unilateral and database information. B. Cooperative and group information. C. Unilateral and cooperative information. D. Cooperative and database information.

C

What are two essential elements in employee empowerment in MACS​ design? A. Ensuring employees understand the information they are using and​ generating, and supporting the implementation of a strategy using a Balanced Scorecard. B. Allowing employees to participate in decision making and ensuring employee moral does not diminish. C. Allowing employees to participate in decision making and ensuring employees understand the information they are using and generating. D. None of the above.

C

What is a periodic​ budget? A: A budget that summarizes the level of activities such as​ sales, purchasing, and production. B: A budget used to identify the expected financial consequences of activities summarized in an operating budgets. C: A budget that is prepared for a fixed interval of​ time, usually one year. D: A budget in which the current budget period is dropped from the master budget and a future budget period is added in its place.

C

What is the relationship between a demand forecast and a sales​ plan?

C

Which of the following incentive compensation plans relies the least on internal measures provided by the management accounting system? A. Cash bonus B. Profit sharing C. Stock options D. Gainsharing

C

You are planning your expenditures for the upcoming school semester. You assume that this​ year's expenditures will equal last​ year's plus​ 2%. What approach to budgeting are you​ using? A. Financial budgeting because it helps identify any expected financial consequences of the activities summarized for the upcoming school semester. B. Continuous budgeting because it is constantly changing and adapting for the different budget periods. C. Incremental budgeting because spending allocations for this period are proportional adjustments of last​ period's spending allocations. D. Operating budgeting because it summarizes different​ level's of activities including purchases of books for the upcoming semester.

C

____ exceed previous targets by a significant amount and usually require an enormous increase in a goal over the next budgeting period. A. Tight budgets B. Participative budgets C. Stretch targets D. Consultative budgets

C

What are two of the central assumptions of this view? (HRMM)

Central assumptions of HRMM - Organizations operate under a system of beliefs about the values, purpose, and direction of their organization - People find work enjoyable and desire to participate in developing objectives, making decisions, and attaining goals in their work environment - Individuals are motivated by both financial and nonfinancial means of compensation - Employees have a great deal of knowledge and information about their jobs, and can therefore improve the way they perform tasks and benefit the organization as a whole - Individuals are highly creative, ethical, and responsible - Employees desire opportunities to produce constructive changes in their organizations

What are two of the central assumptions of this view? (Taylorism)

Central assumptions of Taylorism: -People find work objectionable and do not want to make decisions or exercise creativity on the job -Money is the major driver of performance -Employees should follow highly detailed, prescribed procedures developed by experts (industrial engineers) by breaking down tasks to small parts ("science" for each part; time and motion studies)

Name three features of performance-based incentive systems.

Clear relationship between actions and rewards Salary, bonus, or stock rewards? (Current or deferred rewards?) Reward individual or group (firm) performance? Reward only controllable performance? Reward inputs or outputs? Financial or nonfinancial performance? Absolute or relative performance? Objective or subjective evaluation?

An employee may feel threatened by change for all of the following reasons EXCEPT: A: Potential loss of job B: Increase in responsibility C: Change in D: compensation None of the above

D

How does task control differ from results​ control? A. Task control focuses on measuring and comparing employee performance against stated objectives. Results control is the process of finding ways to control human behavior so a job is completed in a prespecified manner. B. Task control is the process of finding ways to control human behavior so a job is completed in a prespecified manner. Results control focuses on measuring and comparing employee performance against stated objectives. C. Task control is most appropriate when there are legal or safety​ requirements, when employees handle liquid or precious​ assets, or when the organization can control the environment sufficiently to eliminate the need for judgment. Results control is most effective when organization members understand the​ organization's objectives, and have the knowledge and skill to respond to changing situations with sound decisions and actions. D. Both B and C are correct.

D

List three qualitative measures of performance. A. Profit per​ unit, image of a​ product, and measures of customer satisfaction B. Cost per​ unit, reputation of a​ product, and profit per unit C. Reputation of a​ product, cost per​ unit, and return on investment D. Image of a​ product, reputation of a​ product, and measures of customer satisfaction

D

Nonfinancial measures of performance include all of the following EXCEPT: A: Market share B: Cycle time C: Defect rate D: Gross margin

D

Quality​ engineering, quality​ training, statistical process​ control, and supplier certification are what kinds of quality​ costs? A. Internal failure costs. B. Appraisal costs. C. External failure costs. D. Prevention costs.

D

What are the three types of information gathering and sharing used under the cooperative form of​ benchmarking? A. Group, unilateral, and cooperative. B. Indirect/third party,​ group, and cooperative. C. Cooperative, unilateral, and database. D. Database, indirect/third​ party, and group.

D

What are the two essential financial elements needed to arrive at a target​ cost? A. The two essential financial elements needed to arrive at a target cost are the target selling price and the return on sales. The target cost is the difference between the target selling price and the return on sales. B. The two essential financial elements needed to arrive at a target cost are the competitions selling price and the competitions profit margin. The target cost is the difference between the competitions selling price and the competitions profit margin. C. The two essential financial elements needed to arrive at a target cost are the target selling price and the target profit margin. The target cost is the sum of the target selling price and the target profit margin. D. The two essential financial elements needed to arrive at a target cost are the target selling price and the target profit margin. The target cost is the difference between the target selling price and the target profit margin.

D

What are three quantitative financial measures of performance in a manufacturing​ organization? A. Cycle​ time, number of​ defects, and market share. B. Cycle​ time, number of​ defects, and return on investment. C. Cost per​ unit, number of​ defects, and market share. D. Cost per​ unit, profit per​ unit, and return on investment.

D

What is a nonfinancial measure that a company might use in order to motivate achieving the objective of anticipating future customer​ needs? A. The number of new projects launched based on customer input. B. The operational efficiency of producing its products. C. Time spent with key customers at targeted accounts learning about their future opportunities and needs. D. Both A and C.

D

What is a nonfinancial measure that a company might use in order to motivate achieving the objective of reducing product development cycle time across an array of​ products? A. The number of projects delivered on time. B. The average time spent by projects at the​ development, test, and launch stages of the development process. C. Total​ research, development and engineering​ (RD&E) time from idea to market. D. All of the above.

D

What is a​ budget? A. A budget is a quantitative model of the expected consequences of the​ organization's short-term operating activities. B. A budget typically expresses the expected money inflows and outflows in order to assess whether the planned operations will meet the​ organization's financial objectives. C. A budget is the amount of money actually spent on the development of a product. D. Both A and B.

D

What is goal​ congruence? A. Goal congruence occurs when employees monitor and regulate their own behavior and perform to their highest levels. B. Goal congruence occurs when managers try to establish systems that they do not have to personally monitor on a regular basis. C. Goal congruence is the process of finding ways to control human behavior so that a job is completed in a prespecified manner. D. Goal congruence occurs when individuals are able to align their goals at work with those of the organization.

D

What is profit​ sharing? A. Profit sharing is a​ lump-sum reward, that does not become part of the​ employee's base pay in subsequent years. B. Profit sharing is a portion of the​ organization's reported expenses that shows up as residual income. C. Profit sharing is income shareholders receive as a bonus when companies have high profits during the year. D. Profit sharing is a cash bonus incentive compensation plan where the total of all cash bonuses paid to all employees is determined by a formula involving the​ organization's, or an organization​ unit's, reported profit.

D

What is target​ costing? A. A method of cost allocation that focuses on allocating costs for products in the​ research, development, and engineering​ (RD&E) stage across the total life cycle of a product. It considers economic factors associated with creating value for customers and shareholders. B. A method of cost reduction that focuses on reducing costs for customers. It considers cost reductions during the development stage of a product life​ cycle, ignoring all other​ total-life-cycle costs. C. A method that allows companies to charge lower prices to customers to keep business going. It considers economic factors associated with creating value for customers and shareholders. D. A method of profit planning and cost reduction that focuses on reducing costs for products in the​ research, development and engineering​ (RD&E) stage of the total life cycle of a product. It considers all aspects of the value chain and explicitly recognizes​ total-life-cycle costs.

D

What is the additional cost if a unit rejected at inspection can be reworked to meet quality standards by performing some additional​ operations? A. Direct rework labor. B. Additional direct materials used. C. Opportunity costs from a management perspective. D. All of the above.

D

What is the difference between an operating and a financial​ budget? A. Financial budgets include a statement of expected cash​ flows, projected balance​ sheet, and a projected income statement. Operating budgets include​ sales, capital​ spending, production, materials​ purchasing, labor hiring and​ training, and administrative and discretionary spending plans. B. Financial budgets represent projected financial results for an organization. Operating budgets are plans used to guide the operations of the organization. C. Financial budgets are plans used to guide the operations of the organization. Operating budgets represent projected financial results for an organization. D. Both A and B are correct.

D

What is value​ engineering? A. Value engineering is a process in which each component of a product is scrutinized to determine whether it is possible to reduce costs while maintaining functionality and performance. B. Value engineering is the process of measuring the value of each of the​ company's products. C. Value engineering is an organized effort directed at analyzing the functions of the various components for the purpose of achieving these functions at the lowest overall cost without reductions in required​ performance, reliability,​ maintainability, quality,​ safety, recyclability, and usability. D. Both A and B.

D

You are willing to donate to worthy organizations.​ However, you believe strongly that each request for a donation should be evaluated on the basis of its own merits. You would not feel bad in any year if you donated nothing. What approach to budgeting are you​ using? A. Incremental budgeting because each​ period's expenditure level is based on a discretionary amount donated for that charity during the previous period. B. Periodic budget because it is prepared for a fixed interval of​ time, usually one year. C. Continuous budgeting because this allows for a monthly adjustment to take place in the budget that then adds to the future expense budget. D. Zero-based budgeting because each year the charities to which I donate must reestablish their need.

D

True or False: All studies show a positive correlation between executive compensation and shareholder wealth.

False

True or false? Many organizations have begun to move away from organizations with fewer layers (flat organizations) to those with many layers of management (tall organizations).

False

Name and describe three dysfunctional behaviors.

Gaming the performance indicator - Altering job-related actions in an attempt to manipulate a performance indicator (for example, sales pressure or on-time delivery) Data falsification - Knowingly altering records Smoothing - A form of earnings management that accelerates or delays the flow of data without altering the organization's activities

Name and describe the two types of reward systems that motivate employees

Intrinsic rewards (not affected by MACS): reflect Satisfaction from doing the job Growth opportunities the job provides Extrinsic rewards: motivate desired behavior by providing an explicit (often financial) reward based on assessed performance

Name three consequences of failing to consider behavior when implementing a MACS?

Low (or no) goal congruence Low motivation Dysfunctional behavior

What is the role of management according to the Scientific Management School (Taylorism)?

Role of management (Taylorism) -Behavior should be monitored and controlled very carefully -Provide incentives to perform job in the designated "best way"

What is the role of management according to the Human Resources Model of Motivation (HRMM)?

Role of management in HRMM Model - Improve the quality of working life - Introduce employee responsibility for and participation in decisions in the work environment

Define task control and results control

Task control - process of finding ways to control behavior so that a job is completed in a pre-specified manner Results control - measuring employee performance against stated objectives

True or false? Using multiple measures of performance helps employees focus on several dimensions of their jobs rather than just one dimension

True

Results control is most effective for which of the following individuals: Pharmacist Vacuum cleaner salesman Banker Pilot

Vacuum Cleaner Salesman