ACCT 2210 - Exam 4 - CH 12 & 13

When making a decision to either buy a movie ticket or rent a DVD, the cost of the movie ticket is an example of a(n) ______ cost.

- avoidable - incremental

The balanced scorecard framework

- considers market performance as a financial measure - holds organizations accountable for translating improvements in nonfinancial performance to financial results

Irrelevant costs include

- future costs that do not differ between alternatives - sunk costs

Irrelevant costs include _________.

- future costs that do not differ between alternatives - sunk costs

Components of throughput time include ______ time.

- queue - process - inspection

Quality cost information reports

- show managers if quality control costs are poorly distributed - help identify the financial cost of defects - give managers an idea of where to focus quality control efforts

When considering accepting a special order:

- there must be idle capacity - normal sales must not be affected

A manufacturing cycle efficiency of 40% means that Blank

- value-added activities are being performed 40% of the time - the typical order is being worked on 40% of the time

Isolating relevant costs is desirable because

-Critical information may be overlooked with the total cost approach -All information needed for the total cost approach is rarely available - Irrelevant costs may be used incorrectly in the analysis

A series of steps that are followed in order to carry out some task in an organization is called a(n) ______.

Business process

T or F: Opportunity costs are not found in accounting records because they are not relevant to decisions

False

T or F: Opportunity costs are not found in accounting records because they are not relevant to decisions.

False

T or F: Some decisions have only one alternative and cannot consider steps in decision making. True false question.

False

T or F: True or false: Corporate social responsibility focuses on legal compliance only. True false question.

False

True or false: Depreciation of existing assets is relevant to decisions.

False

A business segment should only be dropped if a company can save more in _________ costs than it loses in contribution margin. Multiple choice question.

Fixed

A leading organization in the field of social and environmental performance measurement is the

Global reporting initiative

When there is a constrained resource, the best way to increase profits is to ______.

Increase the capacity of the bottleneck

Time spent ensuring that the product is not defective is referred to as

Inspection time

Assembling products and handling baggage are examples of ______ processes.

Internal business

Two or more products that are produced from a common input are known as

Joint products

Which of the following is NOT a dimension of learning and growth measures? - Wellness/ safety - Compensation and advancement - Skills development - lean resource management

Lean resource management

A decision to carry out one of the activities in the value chain internally rather than to purchase externally from a supplier is a ______ decision.

Make or buy

When it comes to quality of conformance, an economy car __________ quality of conformance as a luxury car

May have the same

The "triple-bottom line" refers to

People, planet, and profit

Costs that have already been incurred and cannot be avoided regardless of what a manager decides to do are ______ costs.

Sunk

If a company is using a resource that could be used for some other purpose, the opportunity cost of that resource is __________.

The profit from the best alternative use of the resource

Opportunity costs should ______ be included in a make or buy analysis.

always

Balanced Scorecard

an integrated set of performance measures that are derived from and support the organization's strategy

Costs incurred to identify defective products before they are shipped to customers are ______ costs.

appraisal

A cost that can be eliminated in whole or in part by choosing one alternative over another is a(n) ________ cost.

avoidable

Synonyms for differential costs include ______ cost.

avoidable or incremental costs

A cost that can be eliminated by choosing one alternative over another is a(n)________ cost

avoidable or relevant

A series of steps that are followed in order to carry out some task in an organization is called a(n)

business process

Measures related to innovation and time are included in the

business processes of the balanced scorecard

When considering overall equipment effectiveness, avoiding minor work stoppages and retaining properly trained operators to run and maintain machines is the key to maximizing the

efficiency rate

T or F : A company's strategy has an important influence on the categories it will include on its balanced scorecard.

false

Measures related to trend and market performance are included in the ______ section of the balanced scorecard

financial

When making a volume-trade off decision, managers should ignore ______.

fixed costs

When making a product line decision, a company may focus on lost contribution margin and avoidable fixed costs or prepare comparative ______.

income statements

Costs incurred to identify defective products before they are shipped to customers are called

inspection or appraisal costs

What the company does in an attempt to satisfy customers falls into the ______ group of the balance scorecard.

internal business processes

Costs that result from identifying defects before products are shipped to customers and include the cost of scrap and rework are ______ costs.

internal failure

Future costs and benefits that do not differ between alternatives are ______ costs to the decision-making process.

irrelevant

When deciding whether to drive your car or take a train to a destination, the costs for your car insurance and driver's license are ______ costs.

irrelevant

The advantage of using a balanced scorecard is that

it continuously test the theories underlying management strategies

Measures related to recruiting and retention are included in the _________ and ________ section of the balance

learning and growth

Social and environmental performance measures ______ balanced scorecard.

may be incorporated into an existing

Differential costs and benefits that should be considered in a decision _________.

may be qualitative or quantitative

A MCE of less than 1 indicates

non-value added time is present

Compensation should ______.

only be tied to balanced scorecard measures after the organization has been successfully managed with it for some time

The potential benefit given up when selecting one alternative over another is a(n) ______ cost.

opportunity

A balanced scorecard ______.

presents a theory of how a company can take action to attain its desired outcomes

Implementing a quality control project to prevent defects from occurring results in ______ costs.

prevention

To reduce the cost of quality organizations should increase __________.

prevention and appraisal costs to reduce internal and external failure costs

The only value-added component of throughput time is

process time

Manufacturing cycle efficiency

process time / throughput time

Defect-free output ÷ total output = the _________ rate

quality

Preventing, detecting, and dealing with defects causes the incurrence of ________ costs.

quality

To analyze a company's current quality management efforts, a(n)____________ report should be prepared

quality cost

Prevention, appraisal, internal and external failure costs are detailed on a(n)

quality cost report

Products that meet or exceed their expectations and are free from defects that mar or degrade their performance are said to have a high

quality of conformance

Time a product spends waiting to be worked on, moved inspected or shipped is referred to as

queue time

When a manager increases the capacity of the bottleneck, it is called

relaxing or elevating the constraint

Costs and benefits that always differ between alternatives are _______ costs and benefits.

relevant

Differential revenue is an example of a(n) ________ benefit.

relevant

When making a decision only ________ costs and benefits should to be included in the analysis.

relevant

When planning a trip and deciding to drive your car or take the train, gasoline is a(n)______ cost.

relevant

When making a decision, qualitative differences between alternatives ________ be ignored.

should not

Which of the following is NOT a dimension of internal business process measures? - Skills development - Lean resourcement management - Cost - Agility

skills development

Customer value propositions are the essence of

strategy

operational excellence is an example of a company

strategy

Because companies target different customers with different kinds of products and services, performance measures should be tailored to the specific

strategy of the company

A cost that can be eliminated by choosing one alternative over another is a(n)_____________

sunk cost

Corporate social responsibility performance reports are also called

sustainability reports

When making a decision, only relevant items are included in the analysis of the alternatives when using __________.

the differential cost approach only

If a balanced scorecard is well constructed,

the performance measures should link together on a cause-and-effect basis

If a balanced scorecard is well constructed, ________________.

the performance measures should link together on a cause-and-effect basis

A set of activities ranging from development to production to after-sales service is called _________.

the value chain

The period from which a product begins production as raw materials and ends as a finished product is known as ________ time or manufacturing cycle time

throughput

The manufacturing cycle efficiency is computed by relating the value-added time to the

throughput time

When considering a company's expanded set of corporate social responsibilities, "people, planet and profit: is also know as the

triple bottom line

When considering overall equipment effectiveness, avoiding machine breakdowns and minimizing average setup times is the key to increasing the

utilization rate

A special order should be accepted __________.

when the incremental revenue from the special order exceeds the incremental costs of the order

Focusing on future costs and benefits that are not the same between the choices is ________.

differential analysis

The key to effective decision making is _______.

differential analysis

Performance measures typically used in the balanced scorecard are

- Financial - Customer - Internal Business processes - Learning & Growth

Average costs

- are often misleading - contain sunk costs

An integrated set of performance measures that are derived from the company's strategy is ______.

A balanced scorecard

The time between when an order is placed and when it is delivered is known as the

Delivery cycle time

Which of the following is not a category of quality costs? - internal failure costs - Prevention costs - Appraisal costs - Direct costs

Direct costs

Which of the following is not a category of quality costs? - prevention costs - internal failure costs - Appraisal costs - Direct costs

Direct costs

Actual run time ÷ ideal run rate = the ______ rate.

Efficiency

T or F: Improvements in learning and growth and internal business process measures should ultimately have a positive influence on customer measures.

True

T or F: Reducing wait time often enables companies to increase customer satisfaction and profits.

True

True or false: Mingling irrelevant and relevant costs may cause confusion and distract attention from critical information.

True

When demand for products exceeds the production capacity what decision must me made

Volume trade off

The elapsed time from when a customer order is received and when production begins is called

Wait time

Delivery Cycle Time

Wait time + Inspection time + process time + Move time + queue time

Which of the following can make a product line look less profitable than it really is?

allocated common fixed costs

A business segment should only be dropped if a company can avoid more in fixed costs than it gives up in ______.

contribution margin

When a constraint exists, companies need to focus on maximizing ______.

contribution margin per unit of constraint

The sum of prevention, appraisal, internal failure, and external failure costs is called the

cost of quality

Measures related to satisfaction, lifetime value and loyalty are included in the ________ section of the balanced scorecard.

customer

The first step in decision making is too __________.

define the alternatives

When considering decision alternatives, only relevant costs are included when using the ________ cost approach

differential