Chapter 11 Cost Accounting

Which of the following manufacturing systems is a demand-pull system?

a. A traditional manufacturing system b. An activity-based manufacturing system c. A target manufacturing system d. A just-in-time manufacturing system D

Which of the following strategies strives to increase customer value by increasing customer realization?

a. A value chain strategy b. A cost-leadership strategy c. A differentiation strategy d. A target costing strategy C

Which of the following permits or allows defects to occur while managing quality, provided they do not exceed a predetermined level?

a. Acceptable quality level b. Activity-based quality level c. Backflush quality level d. Differentiation quality level A

The strategy which involves choosing among alternative strategies with the goal of selecting a strategy or strategies that provides a company with reasonable assurance of long-term growth and survival is called:

a. Competitive advantage b. Strategic cost management c. Strategic decision making d. Customer value C

The difference between what a customer receives and what the customer gives up is called:

a. Customer value b. Strategic cost management c. Competitive advantage d. Strategic decision making A

Which of the following manufacturing costs is assigned through allocation under just-in-time (JIT) manufacturing environment?

a. Direct labor b. Insurance and taxes c. Materials handling d. Operating supplies B

The difference between the sales price needed to capture a predetermined market share and the desired profit per unit is called:

a. Gross profit b. Target market c. Target price d. Target cost D

The relationships among activities that are performed with a firm's portion of the value chain is(are) called:

a. Internal linkages b. External linkages c. Industrial value chain d. Both a and b A

The factor(s) that describe the relationships of a firm's value chain activities that are performed with its suppliers and customers is(are) called:

a. Internal linkages b. External linkages c. Industrial value chain d. Both a and b B

The viewpoint that describes the general sales pattern of a product as it passes through the introduction, growth, maturity, and decline stages is called the:

a. Marketing viewpoint b. Customer viewpoint c. Production viewpoint d. Accounting viewpoint A

The structural and executional factors that determine the long-term cost structure of an organization are called:

a. Organizational activities b. Operational cost drivers c. Operational activities d. Organizational cost drivers D

The factors that drive the cost of day-to-day activities performed as a result of the structure and processes selected by the organization are called:

a. Organizational activities b. Organizational cost drivers c. Operational cost drivers d. Operational activities C

The time a product exists—from conception to abandonment is called the:

a. Revenue producing life b. Product life cycle c. Consumable life d. Introduction stage B

The use of cost data to develop and identify superior strategies that will produce a sustainable competitive advantage is called:

a. Strategic decision making b. Competitive advantage c. Strategic cost management d. Customer value C

The strategy to create better customer value for the same or lower cost than competitors or creating equivalent value for lower cost than offered by competitors is called:

a. Strategic decision making b. Competitive advantage c. Strategic cost management d. Total product B

Which of the following stages in the product life cycle focuses on obtaining a foothold in the market from a marketing viewpoint?

a. The maturity stage b. The value stage c. The introduction stage d. The consumable stage C

Which of the following viewpoints of a product life cycle describes the life cycle stages by changes in the activities performed and emphasizes life-cycle costs?

a. The revenue viewpoint b. The production viewpoint c. The supplier viewpoint d. The maturity viewpoint B

Which of the following refers to the complete range of tangible and intangible benefits that a customer receives from a purchased product?

a. The value product b. The activity product c. The strategic product d. The total product D

the traditional approach of permitting defects to occur as long as they do NOT exceed a certain level is called

a. Total quality control b. Zero defects c. Acceptable quality level d. Both a and c C

Which of the following are true about total quality control?

a. Total quality control is an approach to differentiate and reduce overall quality costs. b. Total quality control demands production of defect-free products. c. Total quality control links suppliers closely with the firm. d. All of these statements are true about total quality control. D

A strategy to provide the same or better value to customers at a lower cost than offered by competitors to achieve competitive advantage is:

a. a value chain strategy. b. a cost leadership strategy. c. a linkage strategy. d. a focusing strategy. B

Which of the following is NOT a trait of a JIT system?

a. acceptable quality level b. long-term contracts c. multi-skilled labor d. high employee involvement A

Life-cycle cost management consists of

a. actions taken to enable a product to be designed, developed, produced, marketed, distributed, operated, maintained, serviced, and disposed of in order to maximize profits. b. actions to extend the life of a product through design, development, production, and maintenance. c. actions that focus on minimizing the cost of developing, designing, producing, distributing, operating, servicing, and disposal of a product. d. actions taken to design, develop, test, market, distribute, maintain, service, and dispose of a product to maximize revenues.

Which of the following manufacturing costs is assigned to products in a JIT environment using allocation?

a. cafeteria services b. equipment depreciation c. insurance and taxes d. operating supplies C

Which of the life-cycle viewpoints is the revenue-oriented viewpoint?

a. consumable life-cycle viewpoint b. production viewpoint c. marketing viewpoint d. planning viewpoint C

Life-cycle cost management emphasizes

a. cost control. b. cost reduction. c. normal costing. d. process costing. B

competitive advantage has been established when

a. customers see the variation as important and the value added to the customer exceeds the cost of providing differentiation. b. a high-cost strategy increases customer value by minimizing customer sacrifices. c. a low-profit item is dropped from the product line. d. both a and b. A

Which stage in the marketing viewpoint is characterized by preproduction and startup activities?

a. decline b. introduction c. growth d. maturity B

he stage during which the product loses market acceptance is called the:

a. decline stage b. growth stage c. maturity stage d. introduction stage A

The first link of the internal value chain is

a. design. b. develop. c. market. d. distribute. A

The last link of the internal value chain is

a. design. b. service. c. market. d. distribute. B

Which of the following manufacturing costs is assigned to products in a traditional environment using driver tracing?

a. direct labor b. direct materials c. energy d. insurance C

Which of the following is NOT a stage of the consumable life-cycle viewpoint?

a. disposal b. maintaining c. logistics d. purchasing C

Plant layout, quality management systems, and providing capacity are examples of

a. executional activities. b. structural activities. c. operational activities. d. both a and b. A

Building plants, management structuring, and grouping employees are examples of

a. executional activities. b. structural activities. c. operational activities. d. both a and b. B

Analyzing how costs and other financial factors vary as different bundles of activities are considered to strengthen a firm's strategic position is the process of

a. exploiting linkages. b. design. c. cost driver analysis. d. distribution. A

When a computer manufacturing company addresses supplier production problems, it is focusing on

a. external linkages. b. internal linkages. c. a differentiation strategy. d. a cost leadership strategy. A

When a computer company targets customers in the South, it is following a

a. focusing strategy. b. low-cost strategy. c. differentiation strategy. d. strategic allocation strategy. A

When a computer company selects a mix of strategies in order to create sustainable competitive advantage, it is following a

a. focusing strategy. b. low-cost strategy. c. differentiation strategy. d. strategic positioning strategy. D

ation for life-cycle cost management is supported by a(n)

a. functional-based costing system. b. activity-based costing system. c. normal costing system. d. all of these. B

The consumable life of a product is of most interest to the:

a. government. b. auditor. c. creditor. d. customer. D

According to the authors, 90 percent or more of a product's life-cycle costs are determined during

a. growth stage. b. development stage. c. decline stage. d. maturity stage. B

If JIT manufacturing is used and each manufacturing cell produces a single product, which of the following is considered a direct product cost?

a. inspection costs b. materials c. setup costs d. all of these D

Which of the following manufacturing costs is assigned to products in a traditional and JIT environment using allocation?

a. insurance and taxes b. direct labor c. supervision (department) d. custodial services A

At which stage of the consumable life-cycle is price sensitivity low?

a. introduction b. growth c. maturity d. decline A

The period of time when sales increase at a decreasing rate is called the:

a. introduction stage b. growth stage c. decline stage d. maturity stage D

The period of time when sales increase at an increasing rate is called the:

a. introduction stage b. maturity stage c. growth stage d. decline stage C

Which of the following manufacturing costs is assigned to products in JIT environment using direct tracing?

a. material handling b. repairs and maintenance c. custodial services d. all of these D

In activity-based costing, supplier costs

a. must be narrower, including only the purchase price. b. are allocated to products arbitrarily. c. include costs of quality, reliability and timeliness and are assigned to products on a causal basis. d. all of these statements are true. C

Structural and executional activities are types of

a. organizational activities. b. operating activities. c. JIT. d. both a and b. A

If JIT manufacturing is used and each manufacturing cell produces a single product, all of the following are considered direct product costs EXCEPT

a. overtime wages for cell workers. b. the salary of the plant supervisor. c. the salary of the cell supervisor. d. all of these. B

Which of the following is NOT a stage of the production life-cycle viewpoint?

a. planning b. production c. purchasing d. logistics C

In a JIT manufacturing environment, product-costing information is used mainly for all of the following EXCEPT

a. product costing of inventory for financial reporting purposes. b. pricing decisions. c. product profitability analysis. d. make-or-buy decisions. A

Which of the life-cycle viewpoints is the cost-oriented viewpoint?

a. product life-cycle b. consumable life-cycle c. production life-cycle d. planning life-cycle C

Which viewpoint of the product life-cycle is customer-value oriented?

a. production life-cycle b. marketing life-cycle c. consumable life-cycle d. planning life-cycle C

Which of the following is NOT a trait of a traditional manufacturing system?

a. push-through system b. short-term supplier contracts c. value-added focus d. total quality control D

Which of the following is a trait of a JIT system?

a. push-through system b. significant inventory c. buyers' market d. large supplier base C

The industrial value-chain analysis

a. recognizes only complex linkages within the firm. b. is not compatible with differentiation strategies. c. determines a linked set of value-creating activities. d. requires a firm to operate across the entire value chain. C

Under a traditional environment, costs related to repairs and maintenance is assigned through:

a. segregation. b. allocation. c. direct tracing. d. driver tracing. D

If traditional manufacturing is used, which of the following is considered direct costs?

a. setup costs b. direct labor c. maintenance of machinery d. inspection costs B

The industry value chain includes

a. shareholder value chain activities as well as firm activities. b. buyer and supplier value chain activities as well as firm activities. c. only firm activities. d. only firm production activities. B

A just-in-time (JIT) manufacturing system cannot be implemented without a commitment to:

a. short product life cycles. b. acceptable quality levels (AQL). c. total quality control (TQC). d. target costing. ​ C

Identifying profitable and unprofitable customers is an example of exploiting

a. supplier linkages. b. the product life cycle. c. consumable life. d. customer linkages. D

JIT manufacturing differs from traditional manufacturing in all of the following ways EXCEPT

a. the treatment of direct materials and direct labor for product costing. b. the level of inventories. c. the approach to quality control. d. the physical layout of the manufacturing process. A

The goal of total quality control is

a. to have less defective material than good material. b. to permit defects as long as they do not exceed a certain level. c. to have zero defects. d. both b and c. C

The approach to quality control which attempts to achieve zero defects is called:

a. traditional b. acceptable quality level c. total quality control d. marginal control C

The operational activity of assembling parts is an example of a

a. unit-level activity. b. batch-level activity. c. product-level activity. d. facility-level activity. A

The operational activity of inspecting is classified as a

a. unit-level activity. b. batch-level activity. c. product-level activity. d. facility-level activity. B

The operational activity of moving inventory is classified as a

a. unit-level activity. b. batch-level activity. c. product-level activity. d. facility-level activity. B

The operational activity of setting up equipment is classified as a

a. unit-level activity. b. batch-level activity. c. product-level activity. d. facility-level activity. B

The operational activity of redesigning products is classified as a

a. unit-level activity. b. batch-level activity. c. product-level activity. d. facility-level activity. C

Activities required to design, develop, produce, market, distribute, and service a product are known as

a. whole life activities. b. value-chain activities. c. target activities. d. overhead. B

Traditional manufacturing uses which of the following philosophies of quality control?

a. zero defects b. total quality control c. acceptable quality level d. both a and b C