PART 1 PROBLEMS

The balanced scorecard can be made more effective by developing it at a detail level so that employees...

can see how their actions contribute to the success of the firm

Cost management information typically is the responsibility of the:

controller

What is a choice a management accountant must make when developing a costing system for a specific firm?`

cost measurement method

Which of the following is not one of the four perspectives of the balanced scorecard?

costs perspective

Cost system design/selection should consider all except which one of the following?

customer needs

Target Costing:

determines cost based upon market price and desired profit

A time ticket relates to which of the following costs?

direct labor costs

In process costing, unit product cost is calculated by dividing process cost in each department by the equivalent units produced:

during the period

which of the following characteristics applies to process costing but NOT to job costing?

equivalent units

Process cost systems are used in all of the following industries except:

home building

The main objective of value chain analysis is to identify stages of the value chain where the firm can...

increase value to the customer or reduce cost in some way

Which of the following best describes the type of information that cost management must provide that is most important for the success of the organization?

info that addresses the strategic objectives of the organization

In Strengths-Weaknesses-Opportunities-Threats (SWOT) analysis, strengths and weaknesses are most easily identified by looking:

inside the firm at its specific resources

The balanced scorecard...

is forward looking, stressing nonfinancial measures that can be lead to benefits in the future

Which of the following is not a key benefit of the balanced scorecard (BSC)?

it provides a baseline for how an organization's financial operations compare to competition within the industry.

Which one of the following documents records and summarizes the costs of direct materials, direct labor, and factory overhead for a particular job?

job cost sheet

Which of the following would likely not be considered part of the value chain in a service firm?

materials handling

Manufacturing firms use which of the following three inventory accounts?

materials, WIP, finished goods

After critical success factors have been identified, the next step in developing a competitive strategy is to develop relevant and reliable measure for these critical success factors. These measures are important to help the organization:

monitor progress toward achieving strategic goals

Which one of the following is the amount of factory overhead applied that exceeds the actual factory overhead cost?

overapplied overhead

All indirect manufacturing costs are commonly combined into a single cost pool called:

overhead

Standard costs are:

planned costs the firm should attain

The two main advantages of using predetermined factory overhead rates are to provide more accurate unit cost information and to:

provide cost info on a timely basis

How can a firm develop a competitive advantage?

reduce costs or add value

There has been a renewed emphasis on integrative thinking and solving problem cross-functionally.

sales volume

The strategy map is a tool that is used:

to link the perspectives of the balanced scorecard

The additional cost incurred as the cost driver increases by one unit is:

variable cost

A strategy map is...

A cause and effect diagram of the relationships among the balanced scorecard perspectives to show how the achievement of critical success factors in each perspective affects the achievement of goals in other perspectives and the overall financial performance of the firm.

To execute either a cost leadership or differentiation strategy, what is needed to begin the process?

A concise statement of strategy that is clearly communicated within the organization.

What is the BOM?

A detailed listing of all the materials needed for a given job.

Which of the following describes a cost driver?

A factor that causes or relates to a change in the total cost of an activity.

In the current business environment, companies cannot survive without a strategy. What exactly should an effective strategy include?

A set of plans for using resources to achieve sustainable goals

What are the three attributes of cost information?

Accuracy, timeliness, and cost-benefit.

Value activities can best be defined as:

Activities that firms in the industry must perform in the process of producing the product or providing the service.

The management of activities to improve the value received by the customer and the competitiveness of the organization is:

Activity-based management.

Which of the following describes Work-in-Process Inventory?

An inventory account that contains all costs put into the manufacture of products that are started but not complete at the financial statement date.

Since indirect cost cannot be conveniently or economically traced directly to a cost pool or cost object, the management accountant will:

Assign them by means of cost allocation.

The competitive strategy of cost leadership allows a firm to outperform competitors by producing products or services:

At lower cost achieved by increased productivity

Under the Sarbanes-Oxley Act of 2002, the Public Company Accounting Oversight Board (PCAOB) established rules relating to which of the following areas?

Audit quality, ethics, and independence

If a firm goes through the process of making improvements to its critical success factors based on the best practices of other firms, it is using which business process?

Benchmarking

Both cost leadership and differentiated firms can improve on execution through:

Benchmarking and total quality management.

The management accountant who planned to improve an organization's operations by developing models of consumer behavior would be using which of the following contemporary management techniques?

Business analytics

Which of the following aspects of the contemporary business environment involves using statistical methods such as regression or correlation analysis to predict consumer behavior, to measure customer satisfaction, or to develop models for setting prices, among other uses?

Business analytics

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

Business process improvement

How do management accountants support the strategy and execution of differentiated firms?

By gathering, analyzing, and reporting relevant information.

The cost of goods that were finished and transferred out of work-in-process during the current period is:

COG manufactured

The total cost of direct materials, direct labor, and factory overhead transferred from the Work-in-Process Inventory account to the Finished Goods Inventory account during an accounting period is:

COG manufactured

Which of the following is the primary user of management accounting information regarding business units?

Company management

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

Competence, confidentiality, integrity, and credibility

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

Competitive position

Which of the following is not one of the stages of the development of cost management systems?

Cost management systems focus on costs and other financial measures.

The term relevant range as used in cost accounting means the range over which:

Cost relationships are approximately linear.

Which of the following is not a consequence of a lack of strategic information?

Decisions based on quality financial information

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

Determine the organization's critical success factors.

Over the past several years it has become increasingly important for firms to improve achievement towards their social and environmental responsibilities. What is the best way the management accountant can help the firm improve on sustainability?

Develop and implement a sustainability scorecard.

In calculating unit cost in a process costing system, "conversion cost" is defined as the sum of:

Direct labor and factory overhead costs.

According to the Institute of Management Accountants (IMA) Statement of Ethical Professional Practice, what should a management accountant do if a significant ethical situation can't be resolved?

Discuss with immediate supervisor

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

Earn a desired profit

Of the following, which aspect of a contemporary management technique is a framework and process that organizations use to manage the occurrence of possible events that could negatively or positively affect the company's competitiveness and success?

Enterprise risk management

Which of the following is not one of the four steps to obtain the predetermined overhead rate?

Estimate the total amount of direct materials and labor needed for the upcoming operating period.

A normal costing system uses actual costs for direct materials and direct labor, and

Estimated costs for factory overhead.

Which of the following perspectives of a Balanced Scorecard would most likely be the ultimate goal in a strategy map for a public company?

Financial performance

When completed units are sold:

Finished Goods Inventory account is credited.

When completed units are transferred to the warehouse:

Finished Goods Inventory account is debited.

Which of the following tend to be non-differential in the short term since they cannot be changed, but are more likely to be differential in the long term?

Fixed costs

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

Identify alternative actions, determine strategic issues surrounding the problem, choose and implement the desired alternative, and provide an ongoing evaluation of the effectiveness of the implementation

Which of the following is not included in cost management information?

Info about a competitor's market strategy

Corporate management is required to identify and solve problems from a cross-functional view. Instead of viewing a problem as related to a specific business function, management solves these problems by combining skills from different functions simultaneously. This approach is called:

Integrative approach

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

Internal audit and control

Volume-based rates are appropriate in situations where the incurrence of factory overhead:

Is related to a single, common cost driver.

A firm has decided to use the balanced scorecard. Which of the following is not an advantage the company will gain by using the balanced scorecard?

It provides a comprehensive financial overview of the firm.

Which of the following is not an effective way to implement the balanced scorecard?

Make it so that the balanced scorecard cannot be modified so that the strategy can have time to take effect.

Which of the following is not included in the planning and decision making function of management?

Monitoring ST operating performance

A 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 does not use in its financial reports, should the company now include?

Nonfinancial info, including customer satisfaction, innovation, etc

Which one of the following is not a recommendation for a successful implementation of Activity-Based Costing/M?

Obtain support of management and personnel, complete an activity analysis, start with simple system, and use ABC.M on a job that will succeed

The role of the management accountant is to make sustainability indicators an integral part of which of the following?

Product design, strategic planning, management decision making, and purchasing.

Which of the following is a financial CSF?

Sales, market value, Liquidty, and profitability

Which of the following is not a reason why global companies choose to report on corporate responsibility?

Saves time

Successful activity-based costing (ABC) implementation depends upon the firm:

Starting with a relatively simple system.

Which of the following is the most important function of management?

Strategic management

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 thinking

Effective implementation of activity-based costing (ABC) requires:

Support of top management and key employees.

What is not included in the BSC?

Tax reporting

The key distinction between job costing and process costing is:

The accumulation of costs to assign to cost objects.

In performing activity analysis during the design of an activity-based costing (ABC) system, the management accountant studies:

The resources, activities, and cost drivers in the operation.

In order to remain competitive in the contemporary business environment, several firms have started training their employees to stop viewing problems as strictly functional - that is, as only a marketing problem, or an accounting problem, for example. What does this trend illustrate about strategic management?

There has been a renewed emphasis on integrative thinking and solving problem cross-functionally.

Volume-based cost accounting systems often do not provide sufficiently accurate product costing because they:

Too often use an allocation base that does not have a cause-effect relationship to resource usage.

The competitive strategy of differentiation requires that a product or service must be:

Unique in some important way in terms of features, innovation, service or quality.

Under job costing, factory overhead costs are assigned to products or services using labor or machine hours which are:

Volume-based cost drivers.

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

a high level of production efficiency

A strategy can be best defined as

a plan for using a firm's resources to achieve sustainable goals within a competitive environment.

The system where the cost of a product or service is obtained by assigning costs to masses of similar units in each department and then computing unit cost on an average basis is called:

a process costing system

Using value-chain analysis, a firm can develop a competitive advantage by specifically looking for ways to:

add value and reduce cost

Which of the following types of organizations can most benefit from value chain analysis?

all types can benefit

Which of the following is not considered part of the Institute of Management Accountants' definition of management accounting?

analyzing data and providing information