Finance and Cost Management

________ is the detailed planning and engineering of products, services, or processes.

Design of products, services, or processes

Place the four business functions in the order they appear along the value chain: Customer service Design Marketing Production

Design, Production, Marketing, Customer Service

Cost accounting provides information only for management accounting purposes.

FALSE Explanation: Cost accounting provides information for financial accounting as well as for management accounting purposes.

Cost management is narrowly focused on a continuous reduction of costs

FALSE Explanation: Cost management is broadly focused to provide information that helps managers at all levels implement, monitor, and evaluate company strategies.

The best-designed strategies are valuable whether or not they are effectively implemented.

FALSE Explanation: Implementation is essential or the strategy is useless.

Managers always require the information in an accounting system to be presented in the same format.

FALSE Explanation: Individual managers often require the information in an accounting system to be presented or reported differently.

Identifying a company's most important customers does NOT help formulate strategy.

FALSE Explanation: Management accountants help formulate strategy by helping managers answer questions such as "Who are our most important customers, and how do we deliver value to them?"

Management accountants should have little or no role in deciding on a company's strategy.

FALSE Explanation: Management accountants should play a significant role in deciding on a company's strategy

Financial accounting is broader in scope than management accounting.

FALSE Explanation: Management accounting is broader in scope than financial accounting.

________ is the manner by which companies promote and sell their products or services to customers or perspective customers.

Marketing

________ is the acquisition, coordination, and assembly of resources to produce a product or deliver a service.

Production

________ is the generation of, and experimentation with, ideas related to new products, services, or processes.

Research and development

What is strategy? Briefly describe the two broad types of strategies that companies may choose to pursue.

Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives. In other words, strategy describes how a company will compete. 1) quality products or service at low price 2) unique product or service

________ describe(s) the flow of goods, services, and information from the purchase of materials to the delivery of products to consumers, regardless of whether those activities occur in the same organization or with other organizations.

Supply Chain

Strategic cost management describes cost management that specifically focuses on strategic issues.

TRUE

The best-designed strategies and the best-developed capabilities are useless unless they are effectively executed.

TRUE

Cost management involves long-term and short-term decisions that attempt to increase value for customers and lower costs of products or services.

TRue

The approaches and activities of managers in short-run and long-run planning and control decisions that increase value for customers and lower costs of products and services are known as

cost management

The person most likely to use ONLY financial accounting information is a

current shareholder

Customer relationship management initiatives use technology to coordinate all:

customer-facing activities

Cost accounting

provides information on the efficiency of factory labor; provides information on the cost of servicing commercial customers; provides information on the performance of an operating division

Customers are demanding improved performance related to:

reduced costs; both reduced costs and increased quality; lower costs, improved quality, and improved customer service

monthly report comparing budgeted sales by store to actual sales

routine internal reporting

weekly report of total sales generated by each store in the metropolitan area

routine internal reporting

Which of the following groups would be LEAST likely to receive detailed management accounting reports?

stockholders

A data warehouse or infobarn

stores information used by different managers for multiple purposes

Management accounting information includes

tabulated results of customer satisfaction surveys; the cost of producing a product; the percentage of units produced that are defective

Financial accounting provides a historical perspective, whereas management accounting emphasizes

the future

Customer response time involves:

the speed at which an organization responds to customer requests

R&D, production, and customer service are business functions that are all included as part of:

the value chain

Which of the following statements concerning an organization's strategy is NOT true?

A good strategy will always overcome poor implementation.

________ is the after-sale support provided to customers.

Customer Service

________ is a strategy that integrates people and technology in all business functions to enhance relationships with customers, partners, and distributors.

Customer relationship management

Which of the following statements about customer value is NOT true?

Customer value is shown in a corporation's balance sheet.

________ is the delivery of products or services to customers.

Distribution

Which of the following is NOT one of the questions management accountants might attempt to help answer in the formulation of strategy?

Does the strategy comply with GAAP (Generally Accepted Accounting Principles)?

Companies can decide on an appropriate strategy based strictly on internally available information.

FALSE Explanation: Companies must obtain external information as well as internal information to decide on an appropriate strategy.

Management accounting has to strictly follow the rules of generally accepted accounting principles for the purposes of measurement and reporting.

FALSE Explanation: Internal measures and reports do not have to follow GAAP.

Southwest Airlines is an example of a company that pursues a product differentiation strategy.

FALSE Explanation: Southwest Airlines pursues a cost leadership strategy.

Strategy does NOT specify how an organization matches its capabilities with the opportunities in the marketplace.

FALSE Explanation: Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives.

The key to a company's success is always to be the low cost producer in a particular industry.

FALSE Explanation: The low cost producer in a particular industry will not necessarily be successful.

Management accounting information focuses on external reporting

FALSE: Management accounting information focuses on internal reporting

Which of the following descriptors refers to management accounting information?

It provides reasonable and timely estimates.

Which of the following statements about a company's supply chain is true?

Management accountants provide information to enhance a company's supply chain.

Describe the major differences between management accounting and financial accounting for the following: Focus and Emphasis

Management accounting is future oriented. Financial accounting is past oriented.

Describe the major differences between management accounting and financial accounting for the following: Rules of measurement and reporting

Management accounting measurement and reporting does not have to follow GAAP but are based on cost-benefit analysis. Financial accounting measurement and reporting must be prepared in accordance with GAAP and be certified by external, independent auditors.

Describe the major differences between management accounting and financial accounting for the following: Primary Users

The primary users of management accounting information are managers of the organization. The primary users of financial accounting are external users such as investors, banks, regulators, and suppliers.

________ describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers, regardless of whether those activities occur in the same organization or in other organizations.

The supply chain

Which of the following statements refers to management accounting information?

There are no regulations governing the reports.

Briefly describe how managers make use of management accounting information.

To choose strategy, to communicate it, and to determine how best to implement it. To plan business operations related to designing, producing, and marketing a product or service. This includes preparing budgets and determining the prices and cost of products and services. A company must know the cost of each product and service to decide which products to offer and whether to expand or discontinue product lines. To control business operations that includes comparing actual results to the budgeted results and taking corrective action when needed.

________ aims to improve operations throughout the value chain and to deliver products and services that exceed customer expectations.

Total Quality Management

________ is a philosophy in which management improves operations throughout the value chain to deliver products and services that exceed customer expectations.

Total quality management

An Enterprise Resource Planning (ERP) System is a single database that collects data and feeds into applications that support each of the company's business activities, such as purchases, production, distribution, and sales.

True

An ideal database should store information in a way that allows different managers to access the information they need.

True

Companies generally follow one of two basic strategies: 1) providing a quality product or service at low prices, or 2) offering a unique product or service often priced higher than competing products.

True

Cost accounting measures and reports short-term, long-term, financial, and non financial information.

True

Cost management provides information that helps increase value for customers.

True

The balance sheet, income statement, and statement of cash flows are used for financial accounting, and also for management accounting.

True

Strategy is formulated by answering all of the following EXCEPT

Will our external auditors certify our strategy?

Which of the following people is LEAST likely to use management accounting information?

a shareholder evaluating a stock investment

An Enterprise Resource Planning System can best be described as

a single database that collects data and feeds it into applications that support each of the company's business activities, such as purchases, production, distribution, and sales

Managers use management accounting information to ________ strategy

choose, communicate and implement

Whose perceptions of the company's products or services are the most important to the manager?

customers' perception

Processing orders and shipping products or services to customers (also called outbound logistics) is also known as

distribution

annual Report sent to shareholders

external reporting to investors and other outside parties

Financial accounting is concerned primarily with

external reporting to investors, creditors, and government authorities

Which of the following types of information are used in management accounting?

financial information; non-financial information; information focused on the long term

Management accounting

focuses on estimating future revenues, costs, and other measures to forecast activities and their results

Strategy specifies

how an organization matches its own capabilities with the opportunities in the marketplace

In designing strategy, a company must match the opportunities and threats in the marketplace with:

its resources and capabilities

Financial accounting

must comply with GAAP (generally accepted accounting principles)

study detailing sale information of the top-ten selling products

nonroutine internal reporting

Modern cost accounting plays a role in:

planning new products; evaluating operational processes; controlling costs

Financial accounting provides the primary source of information for

preparing the income statement for shareholders

Management accounting includes all of the following EXCEPT

preparing the statement of cash flows

Cost accounting provides all of the following EXCEPT

pricing information from marketing studies

Which item is NOT an area that customers want to see improved levels of performance in?

profit

Modern cost accounting takes the perspective that collecting cost information is a function of the management decisions being made.

true

The key to a company's success is creating value for customers while differentiating itself from its competitors.

true

The value chain is the sequence of business functions in which:

usefulness is added to the products or services of an organization