ACC 306 Exam #1

Direct material costs are included in: Prime Cost: Conversion Cost: Period Cost:

Prime Cost: yes Conversion Cost: no Period Cost: no

When direct tracing is not economically feasible, ______________ ___________ is used to assign costs to cost pools and cost objects.

cost allocation

The process of assigning cost to cost pools and then from cost pools to cost objects is called ______________ ______________.

cost assignment

Which of the following is NOT an example of a volume-based cost driver? a. Quantity of direct materials b. Hours of direct labor c. Number of units produced d. Hours of research and development

d. Hours of research and development

Direct material cost generally include: a. lubricant used in the production machines b. materials used in production not part of the finished product c. incidentals such as glue and nails used in production d. cost of materials used in the production of the product e. a reasonable allowance for scrap and defects

d. cost of materials used in the production of the product e. a reasonable allowance for scrap and defects

When faced with an ethical issue, the management accountant should first: a. communicate the problem to authorities b. discuss the issue with his or her immediate supervisor unless its appears the supervisor is involved c. consult an attorney as to legal obligations and rights d. follow the organization's established policies on the resolution of such conflict

d. follow the organization's established policies on the resolution of such conflict

High Point Rockers is a company that manufactures wooden rocking chairs. The following production costs were incurred last month: Wood Paint (various colors) Glue (one-gallon container) which item(s) is most likely to be treated as an indirect material? a. paint b. wood c. both paint and wood d. glue

d. glue

A primary way to ensure accurate data is to have effective: a. tax preparation specialists on payroll b. managers and employees c. information systems d. internal accounting controls

d. internal accounting controls

The most important management function is: a. planning and decision making b. preparation of financial statements c. management and operational control d. strategic management

d. strategic management

In order to achieve effective execution of strategy: a. the strategy should only be disclosed to management-level employees b. the firm must be differentiated c. top leadership must be detached from the process of managing d. the strategy must be aligned with action

d. the strategy must be aligned with action

The two types of cost assignments are ________ _______ and _______.

direct, tracing, and allocation

Both upstream and downstream costs are considered when using the _____________ - ____________ costing method.

life-cycle

The ______ phase of the value chain includes product development and linkage with suppliers while the _______ phase refers to linkages with customers.

upstream, downstream

The ultimate goal of cost management is reflected by stage ______ of Robert Kaplan's classifications of cost management systems. a. 4 b. 2 c. 1 d. 3

a. 4

Independent verification of the validity of sustainability measures is provided by: a. B Lab b. the firm's internal audit c. the firm's financial and operational audit d. the World Resources Institute

a. B Lab

which of the following motivates teamwork and enables managers to see how activities contribute to the success of others? a. balanced scorecard b. value-chain analysis c. SWOT analysis

a. Balance scorecard

How do Apple Computer, Acer, Seagate, and Nike differ regarding the value chain? a. they operate in different phases of the value chain b. some of the companies need a value chain and others do not c. some are cost leaders and some are differentiators d. some of these companies provide more value activities than others

a. They operate in different phases of the value chain (Apple and Nike focus on upstream and downstream and not manufacturing, whereas Seagate and Acer focus more on manufacturing)

Increasing competitiveness from global markets: a. affects both businesses and not for profit organizations b. has no impact on investors c. is never beneficial to domestic businesses d. is not generally beneficial for consumers

a. affects both businesses and not for profit organizations

Examples of areas where an organization might have opportunities or threats include: a. bargaining power of customers or suppliers b. research and development c. barriers to entry d. rivalry among competitors

a. bargaining power of customers or suppliers c. barriers to entry d. rivalry among competitors

The consequence of shorter product life cycles is that managers must: a. be more flexible in their decision making b. use cost management more extensively c. take a more integrative approach in their decision making

a. be more flexible in their decision making c. take a more integrative approach in their decision making

The management accountant works to implement an organization's strategy: a. by contributing his or her expertise to assist management b. by using the management accountant's skill under the supervision of the chief information officer (CIO) c. by first identifying critical success factors d. as a part of a management team in decision making

a. by contributing his or her expertise to assist management d. as a part of a management team in decision making

The institute of Management Accountants guidelines to assist the management accountant in applying the Statement of Ethical Practice include: a. consult an attorney if needed b. follow the organization's established policies c. disclosure to key regulators d. discuss the matter with an immediate supervisor

a. consult an attorney fi needed b. follow the organization's established policies d. discuss the matter with an immediate supervisor

A merchandising company is likely to have: a. cost of goods sold b. work-in-process inventory c. cost of goods manufactured d. direct materials inventory

a. cost of goods sold

Direct materials cost generally includes: a. cost of materials used in the production of the product b. lubricant used in the production machines c. a reasonable allowance for scrap and defects d. materials used in production not part of the finished product e. incidentals such as glue and nails used in production

a. cost of materials used in the production of the product c. a reasonable allowance for scrap and defects

The perspectives of the balanced scorecard include a. customer satisfaction b. financial performance c. regulatory compliance d. learning and growth

a. customer satisfaction b. financial performance d. learning and growth

The components of the cost of goods manufactured calculation are: a. direct labor b. direct materials used c. overhead d. finished goods

a. direct labor b. direct materials used c. overhead

Environmental performance indicators that are the critical success factors in a sustainability perspective include: a. environmental condition indicators such as ambient air quality b. philanthropy indicators such as direct contributions c. working conditions including worker safety d. operational indicators of stresses to the environment

a. environmental condition indicators such as ambient air quality d. operational indicators of stresses to the environment

Strategies Walmart uses to achieve competitive success include: a. extensive use of technology to reduce cost b. brand recognition c. focus on customer service d. differentiated offerings

a. extensive use of technology to reduce cost c. focus on customer service

For most firms the _______ perspective of the balanced scorecard is the target of the strategy map a. financial b. learning and growth c. internal processes d. customer

a. financial

Cost management information can be best described as: a. financial and non-financial information b. management accounting information c. financial accounting information d. non-financial strategic information

a. financial and non-financial information

Target costing: a. forces firms to be more competitive b. is common when small price differences attract customers c. may require product or process redesign d. monitors product cost throughout its life cycle e. determines product price based on product cost

a. forces firms to be more competitive b. is common when small price differences attract customers c. may require product or process redesign

Examples of recent changes in the contemporary business environment include: a. greater focus on the customer b. advances in enterprise resource management c. a reduction in global competition d. changes in the political environment of business

a. greater focus on the customer b. advances in enterprise resource management d. changes in the political environment of business

SWOT analysis identifies a firm's: a. internal strengths and weaknesses and external opportunities and threats b. internal strengths, weaknesses, opportunities, and threats c. external strengths, weaknesses, opportunities, and threats d. external strengths and weaknesses and internal opportunities and threats

a. internal strengths and weaknesses and external opportunities and threats

Activity analysis: a. is used to identify activity-based cost drivers b. is needed to identify fixed and variable costs c. is necessary to determine the relevant range d. helps improve operational and management control in the firm

a. is used to identify activity-based cost drivers d. helps improve operational and management control in the firm

For many firms the ________ perspective of the balanced scorecard is the base upon which the firm's success is built. a. learning and growth b. customer c. financial d. internal processes

a. learning and growth

The balanced scorecard is best described as a(n): a. management accounting report b. management planning tool c. financial management tool d. summary of key financial information

a. management accounting report

Implementation issues related to the balanced scorecard include: a. processes for assuring the accuracy and reliability of the information in the scorecard b. a process for review and modification of the scorecard as the organization's goals and operations change c. a process to ensure that it accurately reflects the organization's strategy d. a sufficiently complex software and systems development to complete the implementation

a. processes for assuring the accuracy and reliability of the information in the scorecard b. a process for review and modification of the scorecard as the organization's goals and operations change c. a process to ensure that it accurately reflects the organization's strategy

for a differentiation firm, a competitive strategy requires: a. product engineering b. substantial capital investment c. structured organization and policies d strong coordination among functions

a. product engineering d. strong coordination among functions

Characteristics that help determine a firm's operational complexity include: a. production processes and locations b. number and diversity of products c. the system of internal controls d. distribution networks

a. production processes and locations b. number and diversity of products d. distribution networks

Changes to management organization include: a. reports that are useful to cross-functional teams b. a shift away from financial measures of performance c. teamwork and coordination among business functions d. an increase in hierarchical command and control organizations

a. reports that are useful to cross-functional teams b. a shift away from financial measures of performance c. teamwork and coordination among business functions

Internal accounting controls: a. restrict and guide financial processing activities b. consist of policies and procedures c. guarantee accurate financial and managerial accounting data d. are designed to prevent or detect errors and fraud

a. restrict and guide financial processing activities b. consist of policies and procedures d. are designed to prevent or detect errors and fraud

For strategic purposes, "stuck in the middle" refers to a strategy that is not likely to succeed because: a. the firm it is not able to sustain a competitive advantage b. the product is "stuck" between two succeeding levels of technological innovation c. there are too many products over too wide a range of markets d. the strategy is not clearly either cost leaderships or differentiation

a. the firm it is not able to sustain a competitive advantage d. the strategy is not clearly either cost leaderships or differentiation

Which of the following statements are true? a. the law of diminishing marginal productivity occurs at higher levels of the cost driver. b. Over a very broad range of output, the relationship between volume of output and costs tend to be linear. c. at low values for the cost driver, costs increase at a decreasing rate.

a. the law of diminishing marginal productivity occurs at higher levels of the cost driver. c. at low values for the cost driver, costs increase at a decreasing rate

For a cost leadership firm, a competitive strategy requires: a. tight cost control b. strong marketing capability c. process engineering skills d. intense supervision of labor

a. tight cost control c. process engineering skills d. intense supervision of labor

Factors that influence the cost of preparing information for decision making include: a. timeliness b. level of aggregation c. system of internal controls d. level of desired accuracy

a. timeliness b. level of aggregation d. level of desired accuracy

Lean Accounting: a. uses value streams to help understand profitability b. is used by firms that have adopted lean manufacturing c. helps firms understand the profitability impact of lean manufacturing d. is another term for lean manufacturing

a. uses value streams to help understand profitability b. is used by firms that have adopted lean manufacturing c. helps firms understand the profitability impact of lean manufacturing

The key tools used by management accountants to implement strategy include: a. value chain analysis b. SWOT analysis c. enterprise performance management d. the balanced scorecard

a. value chain analysis b. SWOT analysis d. the balanced scorecard

A firm is likely to work hard at process improvement: a. whether a cost leader or differentiator b. only if the firm is a cost leader c. only if the firm is a differentiator

a. whether a cost leader or differentiator

True or False: How successful firms need to apply cost management is dependent on the competitive strategy being used. a. True b. False

b. False

Survey results indicate that many CEO's feel sustainability should be a "top 3" priority their firms to: a. address pressure from regulators b. align strategy, missions and goals c. improve the company's reputation d. reduce costs

b. align strategy, missions and goals c. improve the company's reputation d. reduce costs

step 2, of value chain analysis involves developing the firm's: a. strengths and weaknesses b. competitive advantage c. cost drivers d. value-chain activities

b. competitive advantage

A sound strategy is important because it can help an organization achieve: a. sustainability b. competitive success c. increased profits d. significant cost reduction

b. competitive success

management accounting involves: a. preparing income tax returns b. devising planning systems c. helping formulate organizational strategy d. decision making

b. devising planning systems c. helping formulate organizational strategy d. decision making

Conversion costs do not include: a. indirect materials b. direct materials c. indirect materials d. direct labor

b. direct materials

Due to a focus on the customer, firms now offer a : a. greater variety of products with longer product life cycles b. greater variety of products with shorter life cycles c. smaller number of products with longer life cycles d. smaller number of products with shorter life cycles

b. greater variety of products with shorter life cycles

The analysis of value chain activities can help management: a. determine an appropriate pricing strategy to achieve competitive advantage b. identify parts of the value chain for which the firm is not competitive c. understand the firm's strategic competitive advantage d. identify activities where the firm can add value to customers

b. identify parts of the value chain for which the firm is not competitive c. understand the firm's strategic competitive advantage d. identify activities where the firm can add value to customers

A clothing manufacturer would most likely treat the cost of thread as a(n) _________ material. a. direct b. indirect

b. indirect

Characteristics that help determine a firm's operational complexity include: a. the system of internal controls b. production processes and locations c. number and diversity of products d. distribution networks

b. production processes and locations c. number and diversity of products d. distribution networks

The main purpose of professional certifications for the management accountant is to: a. improve the technical skills and professionalism of the management accountant b. provide a distinct measure of experience, training, and ability c. reduce the incidence of fraud in practice d. raise the status and compensation of management accountants

b. provide a distinct measure of experience, training, and ability

The ability to deliver a product or service faster than the competition is called: a. customer turnaround b. speed-to-market c. statistical quality control d. just-in-time

b. speed-to-market

The cost management technique that determines product cost based on a given competitive price and desired profit is: a. activity-based costing b. target costing c. competitive pricing d. life-cycle costing

b. target costing

Handling situations in which an ethical issue arises requires the management accountant to: a. discuss the issue with an IMA Ethics counselor b. understand the firm's business and strategy c. consult an attorney who specializes in ethical issues d. turn the issue over to the management accountant's supervisor

b. understand the firm's business and strategy

Companies that have increased global business activities in recent decades include: a. Dollar General b. Target c. General Electric d. Walmart

c. General Electric d. Walmart

Which of the following statements is FALSE? a. suppliers can be a threat for a firm b. Demgraphic changes could produce significant advantages or disadvantages for a firm c. Opportunities and threats are most easily identified by analyzing both the industry and the firm itself d. Technological changes can sometimes be unfavorable for a company

c. Opportunities and threats are most easily identified by analyzing both the industry and the firm itself

Fixed costs: a. are defined in relation to volume of output b. should be treated as variable in expected to change over time c. are generally not expected to change within a year d. are defined for a period of time

c. are generally not expected to change within a year d. are defined for a period of time

The type of information recorded and reported in the management organization's of the contemporary business environment include: a. financial information only b. operational information only c. both financial and operational information

c. both financial and operational information

which of the following statements is FALSE regarding growth in the global business environment? a. consumers benefit from this growth b. regulators are impacted significantly by this growth c. not-for-profit organizations are not significantly impacted by this growth d. investors are provided increased opportunities due to this growth

c. not-for-profit organizations are not significantly impacted by this growth

Operational complexity does NOT include the: a. variety of distribution channels b. number of product lines c. number of suppliers d. types of customers

c. number of suppliers

An important step in performing a value-chain is to use the value chain to identify: a. progress made towards achievement of strategic goals b. proper compensation and rewards for managers and employees c. opportunities to add value or to reduce cost d. the organization's critical success factors

c. opportunities to add value or to reduce cost

Point-of-sale updates to the inventory levels is occur when using a(n) ____________ inventory system. a. periodic b. direct costing c. perpetual d. indirect costing

c. perpetual

Having necessary information available to management to facilitate effective decision making is: a. aggregation b. accuracy c. timeliness d. complexity

c. timeliness

How to you calculate cost of goods manufactured

Beginning Work-in-process Add: Direct (Raw) materials used Add: Direct Labor Add: Manufacturing overhead Total Manufacturing Costs to account For ----------------------------------------------- Cost of Goods Manufactured (CoGM)

The commitment of professional __________ means that the management accountant has the competence, confidentiality integrity and credibility to serve management effectively.

Ethics

True or False: Not-for-profit and governmental organizations typically do not need cost management True False

False