ACC 341 Final

Which of the following is a principle underlying the design of cost management systems?

The costing system should be designed so that its benefits exceed its costs

The death spiral concept refers to the process of continually decreasing selling prices to meet foreign competition.

False (The death spiral is continually increasing the prices to match the increased reported costs.)

Which of the following balanced scorecard perspectives focuses on shareholder's interests?

Financial

Decentralized organizations can delegate authority and still maintain control and monitor managers' performance by designing appropriate management control systems. Which of the following responsibility centers would be evaluated similar to an independent business? (CMA, adapted)

Investment Center

Which of the following is not an advantage of decentralization?

Lower cost of monitoring and controlling the activities of local managers

Which of the following statements regarding variances is(are) false? (A) In general and holding all other things constant, an unfavorable variance decreases operating profits. (B) A favorable variance is not always good, and an unfavorable variance is not always bad.

Neither A nor B is false.

Which of the following is not a difficulty in implementing nonfinancial performance measurement systems?

Nonfinancial measures decrease goal congruence.

Which of the following statements is (are) false? (1). In general, the term expense is used for managerial purposes, while the term cost refers to external financial reports. (2). An opportunity cost is the benefit forgone by selecting one alternative over another.

Only (1) is false.

The student health center employs one doctor, three nurses, and several other employees. How would you classify (1) the nurses' salary and (2) film and other materials used in radiology to give X-rays to students? Assume the activity is the number of students visiting the health center.

Option B

Which of the following statements regarding time-drive activity-based costing (TDABC) is not correct?

The cost driver rate for the various activities equals the time available divided by the cost of the resources supplied.

Volume-based costing allocates indirect product costs based on the volume of output, using such allocation bases as direct labor hours, machine hours, or the amount of direct material used in the production process. Activity-based costing (ABC) has consistently shown that Volume-based costing ___________ the cost of high volume products and ______________ the cost of low volume products.

Option B: Overstates, Understates

A company which manufactures custom-made machinery routinely incurs sizable telephone costs in the process of taking sales orders from customers. Which of the following is a proper classification of this cost?

Period Cost

The amount of production possible under normal working conditions, including planned downtime and scheduled vacations, is called:

Practical Capacity

Which of the following budgets is not required in a wholesale organization?

Production

Multiplying the cost driver rate by the cost driver volume measures the _________ for an activity.

Resources Used (In general, activity-based costing estimates the cost of resources used. Resources used for an activity are measured by multiplying the cost driver rate by the cost driver volume.)

What is the purpose of the management control system?

To align more closely the interests of the manager and the interests of the organization.

In a sell-or-process-further decision, the common costs incurred prior to the spilt-off point are irrelevant.

True or False (answer: True)

Since by-products have minor sales value, alternative methods of accounting for them will not have a material effect on the financial statements.

True or False (answer: True)

The only variances that should be investigated are those for which the expected benefits of correction exceed the costs of investigating and correcting.

True or false (answer true) This is a basic principle of cost-benefit.

CMA adapted) Cost drivers are

activities that cause costs to increase as the activity increases.

With the enactment of the Sarbanes-Oxley Act of 2002, all public companies are now required by the SEC to disclose whether or not the company has

A code of Ethics

Which of the following statements regarding business strategies of organizations is not correct?

A cost leader has a high-volume production of a differentiated product, which is identical or nearly identical to their competitors' products.

What term is used to describe a set of performance targets and results that show how well an organization performed in meeting its objectives relating to its stakeholders?

Balanced Scorecard

The individual who would most likely use only financial accounting information in making decisions is a

Company Stockholder

____________ is the delegation of decision-making authority to lower management levels within the organization.

Decentralization (Delegation of decision-making is a basic tenant of decentralization.)

What is the name of the form, document, or record that provides standard quantities of inputs used to produce a unit of output and the standard prices for the inputs?

Standard Cost sheet

The plantwide cost allocation method should be used by companies that manufacture products that are similar and use the same resources.

True: (Correct! Since the products are similar and use the same resources, all of the products should cost roughly the same.)

The difference between variable costs and fixed costs is (CMA adapted)

Unit variable costs are fixed over the relevant range and unit fixed costs are variable.

The set of activities that transforms raw resources into the goods and services end users purchase and consume is called the:

Value Chain

Budgeted Balance sheets combine all of the following except

an examination of all revenues, costs, and other transactions in terms of their effects on cash.

The purpose of the flexible budget is to:

compare actual and budgeted results at virtually any level of production.

A variance can best be described as:

differences between planned results and actual results.

A company has high winter demand and low summer demand for its services. The cost of the unused summer capacity should be allocated:

only to the winter customers.

Which of the following is not a partial productivity measure?

sales value/total cost.

Which of the following terms is used to describe the stage of processing that separates two or more products?

split-off point

Labor variances are more important than material variances in service organizations.

true of false ( answer: true) Correct! Labor is a much greater proportion of the inputs than are materials.