ACG6309 Ch 1
Susan Lopez, a consultant with Deloitte & Young, has just begun an engagement at Four Corners Airlines, which is based in Santa Fe, New Mexico. The company has fallen on hard times of late despite record profits for the rest of the airline industry. Management is somewhat set in its ways and could probably use some "new blood," as the most recent hire to the firm's executive team was 12 years ago. 1-b. What are the balanced scorecard's typical key elements?
Financial measures (checked) Customer measures (checked) Internal business process measures (checked) Measures of learning and growth (checked)
Which of the following is correct regarding the changing role of managerial accounting? The managerial accountant is crunching more numbers than ever before in leading-edge companies. The managerial accountant has been transformed into a financial historian in progressive companies. Managerial accountants are typically isolated in separate departments. Forward-looking goals have transformed managerial accountants into business advisors. Managerial accountants rarely have the title of analyst or take on leadership roles.
Forward-looking goals have transformed managerial accountants into business advisors. (The role of managerial accountants is to become more like business advisors and incorporate forward-looking goals.)
Financial accounting information focuses on which of the following users?
Unions, Consumers, Stockholders, Investors
Which of the following statements are true regarding a value chain?
Value creating activities can be provided by suppliers. Customers must be willing to pay the cost of value chain activities plus profit or the company will fail. Companies define their value chains in different ways
Managerial accounting information often assists management through its
attention-directing function
The role of managerial accounting information in assisting management is a(n): financial-directing role. attention-directing role. planning and controlling role. organizational role. problem-solving role.
attention-directing role.
The vast trove of data that is generated in an organization, together with that which can be acquired to supplement it is often referred to as
big data
The vast amount of data generated by an organization along with supplemental data that can provide context for the internal data is known together as: big data. data governance. data analytics. data science. data estimation.
big data.
One means of motivating managers and other employees to direct their efforts towards achieving the organization's goals is by the preparation of a(n)
budget
A prominent part of planning is the preparation of a(n)
budget detailing projected revenues and costs
The upper limit on the quantity of goods or services that can be produced in a given time period is called the organization's
capacity
In most organizations, the designation given to the executive responsible for all accounting and finance functions is the
chief financial officer
The chief managerial and financial accountant of an organization is the: chief executive officer (CEO). treasurer. vice-president of accounting. internal auditor. chief financial officer (CFO).
chief financial officer (CFO).
Other designations for the term CFO are
controller, comptroller
Data analytics are particularly important to the managerial accountant in what two areas? budgeting and planning. cost behavior and cost estimation. variance analysis and planning. balanced scorecard perspectives and planning. direct cost and direct labor.
cost behavior and cost estimation.
Cost-causing factors are called
cost drivers
Broadly defined, the correlation between costs and cost drivers is referred to as a(n)
cost relationship
The Sarbanes-Oxley Act has greatly increased compliance
costs for large U.S. companies
Making sure that big data is valid and usable is called
data governance
Powerful software tools such as Tableau and RStudio are often used in
data science
Choosing among available alternatives is called
decision making
The four activities of the management team involve planning, directing operational activities, controlling and
decision making
An objective of managerial accounting is providing information for
decision making and planning
The day-to-day work activities of the management team are
decision making, planning, directing operational activities, controlling.
The components of the planning process are
developing detailed financial and operational descriptions of anticipated operations
Running an organization on a day-to-day basis is
directing operational activities
An internal auditor is responsible for
expressing an opinion to top management regarding the effectiveness of the accounting system, expressing an opinion to the board of directors on the organization's internal controls, and reviewing accounting procedures
Most of the purely accounting issues in ethical scandals involve
financial accounting
The use of accounting information for reporting to parties outside the organization is
financial accounting.
The balanced scorecard uses both
financial and nonfinancial performance measures
Managerial accounting plays an important role in a company's data
governance
Managerial accounting
helps managers achieve the organization's goals
A balanced scorecard
includes both financial and nonfinancial performance measures
When assessing an organization's competitiveness, managers are concerned with
innovation, customer opinions, financial viability.
Assume that a managerial accountant regularly communicates with business associates to avoid conflicts of interest and advises relevant parties of potential conflicts. In so doing, the accountant will have applied the ethical standard of: objectivity. confidentiality. integrity. credibility. unified behavior.
integrity.
Reviewing accounting procedures, records and reports and expressing an opinion regarding the effectiveness of the organization's accounting system is done by an organization's
internal auditor
A manager directly involved in the provision of goods or services is in a(n)
line position
Managers that supervise activities that support a company's overall mission but are only indirectly involved in operational activities are in
staff positions
The general counsel, chief communications officer and the CFO are examples of employees in
staff positions.
The process of managing the various activities in the value chain, along with the associated costs, is commonly known as: activity-based costing. strategic cost management. total quality management. computer-integrated costing. sound management practices (SMP).
strategic cost management.
The primary function of a chief financial officer is
supervising all accounting and finance functions.
The cost of resources supplied but unused is known as: practical capacity costs. the cost of theoretical capacity. the cost of unused capacity. the cost of resources supplied. capacity cost.
the cost of unused capacity.
Which of the following typically does not relate to the role of a controller? A controller supervises the accounting department. A controller safeguards an organization's assets. A controller oversees the preparation of reports required by governmental authorities. A controller normally assumes a narrow role within the organization, often preventing the individual's rise to top management ranks. A controller safeguards an organization's assets and a controller normally assumes a narrow role within the organization, often preventing the individual's rise to top management ranks.
A controller safeguards an organization's assets and a controller normally assumes a narrow role within the organization, often preventing the individual's rise to top management ranks.
Which of the following can be linked to a wave of corporate scandals that took place in recent past? Greedy corporate executives. Managers who made over-reaching business deals. Lack of oversight by companies' audit boards and boards of directors. Shoddy work by external auditors. All of these choices are correct.
All of these choices are correct.
Which of the following is NOT a question commonly asked in assessing an organization's competitive position?
Are employees motivated to direct their efforts towards achieving the organization's goals?
AccuSound Corporation manufactures printed circuits for stereo amplifiers. A common product defect is a "drift" caused by failure to maintain precise heat levels during the production process. Rejects from the 100 percent testing program can be reworked to acceptable levels if the defect is drift. However, in a recent analysis of customer complaints, Marie Allen, the assistant controller, and the quality control engineer determined that normal rework does not bring the circuits up to standard. Sampling showed that about half of the reworked circuits will fail after extended amplifier operation. The incidence of failure in the reworked circuits is projected to be about 10 percent over five years. 1. Choose the ethical considerations that Marie Allen should recognize in deciding how to proceed.
Allen should exercise initiative and good judgment in providing management with information having a potentially adverse economic impact. checked Allen should determine whether the controller's request violates her professional or personal standards or the company's code of ethics. checked Allen should protect proprietary information and should not violate the chain of command by discussing this matter with the controller's superiors. checked
Which of the following statements about managerial accountants is false? Managerial accountants more and more are considered "business partners." Managerial accountants often are part of cross-functional teams. An increasing number of organizations are segregating managerial accountants in separate managerial-accounting departments. In a number of companies, managerial accountants make significant business decisions and resolve operating problems. The role of managerial accountants has changed considerably over the past decade.
An increasing number of organizations are segregating managerial accountants in separate managerial-accounting departments. (Managerial accountants are increasingly integrated into all aspects of an organization.)
7. Comparing a Sheraton Hotel's room rate structure, occupancy rate, and restaurant patronage with industry averages. Providing information for decision making and planning.unchecked Assisting managers in directing and controlling operational activities.unchecked Motivating managers and other employees toward the organization's goals.unchecked Measuring the performance of activities, subunits, managers, and other employees within the organization.unchecked Assessing the organization's competitive position, and working with other managers to ensure the organization's long-run competitiveness in its industry.checked
Assessing the organization's competitive position, and working with other managers to ensure the organization's long-run competitiveness in its industry.checked
2. Comparing the actual and planned cost of a consulting engagement completed by an engineering firm such as Allied Engineering. Providing information for decision making and planning.unchecked Assisting managers in directing and controlling operational activities.checked Motivating managers and other employees toward the organization's goals.unchecked Measuring the performance of activities, subunits, managers, and other employees within the organization.checked Assessing the organization's competitive position, and working with other managers to ensure the organization's long-run competitiveness in its industry. unchecked
Assisting managers in directing and controlling operational activities.checked Measuring the performance of activities, subunits, managers, and other employees within the organization.checked
Because managerial accounting reports rarely solve decision problems, what function does a managerial accountant use to assist managers in understanding issues contained within the information produced? Internal business solution function. Learning and growth function. Theoretical capacity function. Customer function. Attention directing function.
Attention directing function.
Which of the following statements represents a similarity between financial and managerial accounting? Multiple Choice Both are useful in providing information for external users. Both are governed by GAAP. Both draw upon data from an organization's accounting system. Both rely heavily on published financial statements. Both are solely concerned with historical transactions.
Both draw upon data from an organization's accounting system.
The professional certification issued by the IMA that is similar to the CPA is the
CMA designation
Which of the following are management accounting certifications?
CMA, CGMA
Which of the following choices correctly depicts activities that would be included in a manufacturer's value chain? Research and DevelopmentMarketingDistributionA.YesYesNoB.YesNoYesC.YesYesYesD.NoYesNoE.NoYesYes Choice A. Choice B. Choice C. Choice D. Choice E.
Choice C. (C.YesYesYes)
Wembley Company has set various goals, and management is now taking appropriate action to ensure that the firm achieves these goals. One such action is to reduce outlays for overhead, which have exceeded budgeted amounts. Which of the following functions best describes this process? Decision making. Planning. Coordinating. Controlling. Organizing.
Controlling (This function is controlling.)
Which of the following organizations focus on best practices and developments in managerial accounting?
Institute of Management Accountants
Susan Lopez, a consultant with Deloitte & Young, has just begun an engagement at Four Corners Airlines, which is based in Santa Fe, New Mexico. The company has fallen on hard times of late despite record profits for the rest of the airline industry. Management is somewhat set in its ways and could probably use some "new blood," as the most recent hire to the firm's executive team was 12 years ago. 2. Lopez wants to assemble a committee to prepare the airline's balanced scorecard. Select the company's functional areas that should be represented on the committee.
Marketing (checked) Finance (checked) Operations (checked) Human resources (checked) Purchasing (checked) Accounting (checked) Planning (checked) Information systems/technology (checked)
Which of the following would likely be considered an internal user of accounting information rather than an external user? Stockholders. Consumer groups. Lenders. Middle-level managers. Government agencies.
Middle-level managers.
1. Developing a bonus reward system for the managers of the various offices of the AAA (American Automobile Association) Travel Agency. Providing information for decision making and planning.unchecked Assisting managers in directing and controlling operational activities.unchecked Motivating managers and other employees toward the organization's goals.checked Measuring the performance of activities, subunits, managers, and other employees within the organization.unchecked Assessing the organization's competitive position, and working with other managers to ensure the organization's long-run competitiveness in its industry. unchecked
Motivating managers and other employees toward the organization's goals.
Which of the fterm-3ollowing managerial functions involves a detailed financial and operational description of anticipated operations? Decision making. Planning. Directing operational activities. Controlling. Measuring.
Planning. (This is a definition for planning.)
What types of organizations use managerial accounting information?
Profit seeking & nonprofit enterprises.
AccuSound Corporation manufactures printed circuits for stereo amplifiers. A common product defect is a "drift" caused by failure to maintain precise heat levels during the production process. Rejects from the 100 percent testing program can be reworked to acceptable levels if the defect is drift. However, in a recent analysis of customer complaints, Marie Allen, the assistant controller, and the quality control engineer determined that normal rework does not bring the circuits up to standard. Sampling showed that about half of the reworked circuits will fail after extended amplifier operation. The incidence of failure in the reworked circuits is projected to be about 10 percent over five years. 3. What should Marie Allen do?
Protect the interests of the company, others in the company, and herself. checked Allen must take some action to reduce her vulnerability. checked Allen should write a report to the controller detailing the probable failure of reworks, the analysis made by her and the quality control engineer, and the controller's instructions in this matter. checked
3. Determining the cost of manufacturing a tennis racket at Wilson Sporting Goods. Providing information for decision making and planning.checked Assisting managers in directing and controlling operational activities.unchecked Motivating managers and other employees toward the organization's goals.unchecked Measuring the performance of activities, subunits, managers, and other employees within the organization.unchecked Assessing the organization's competitive position, and working with other managers to ensure the organization's long-run competitiveness in its industry. unchecked
Providing information for decision making and planning.checked
5. Estimating the annual operating cost of a newly proposed Wells Fargo branch bank. Providing information for decision making and planning.checked Assisting managers in directing and controlling operational activities.unchecked Motivating managers and other employees toward the organization's goals.unchecked Measuring the performance of activities, subunits, managers, and other employees within the organization.unchecked Assessing the organization's competitive position, and working with other managers to ensure the organization's long-run competitiveness in its industry. unchecked
Providing information for decision making and planning.checked
4. Measuring the cost of the inventory of digital cameras on hand in a Best Buy store. Providing information for decision making and planning.checked Assisting managers in directing and controlling operational activities.checked Motivating managers and other employees toward the organization's goals.unchecked Measuring the performance of activities, subunits, managers, and other employees within the organization.checked Assessing the organization's competitive position, and working with other managers to ensure the organization's long-run competitiveness in its industry. unchecked
Providing information for decision making and planning.checked Assisting managers in directing and controlling operational activities.checked Measuring the performance of activities, subunits, managers, and other employees within the organization.checked
6. Measuring the following costs incurred during one month in a Hyatt Regency hotel: (a) Wages of table-service personnel. (b) Property taxes. Providing information for decision making and planning.checked Assisting managers in directing and controlling operational activities.checked Motivating managers and other employees toward the organization's goals.checked Measuring the performance of activities, subunits, managers, and other employees within the organization.checked Assessing the organization's competitive position, and working with other managers to ensure the organization's long-run competitiveness in its industry.checked
Providing information for decision making and planning.checked Assisting managers in directing and controlling operational activities.checked Motivating managers and other employees toward the organization's goals.checked Measuring the performance of activities, subunits, managers, and other employees within the organization.checked Assessing the organization's competitive position, and working with other managers to ensure the organization's long-run competitiveness in its industry.checked
AccuSound Corporation manufactures printed circuits for stereo amplifiers. A common product defect is a "drift" caused by failure to maintain precise heat levels during the production process. Rejects from the 100 percent testing program can be reworked to acceptable levels if the defect is drift. However, in a recent analysis of customer complaints, Marie Allen, the assistant controller, and the quality control engineer determined that normal rework does not bring the circuits up to standard. Sampling showed that about half of the reworked circuits will fail after extended amplifier operation. The incidence of failure in the reworked circuits is projected to be about 10 percent over five years. 2. Choose what ethical responsibilities should be accepted by: (a) the controller, (b) the quality control engineer, and (c) the plant manager. a. The ethical responsibilities that should be accepted by the controller are:
Reporting responsibilities. checked Protect the overall company interests. checked Informing superiors in this matter. checked Working with others in the company to find solutions. checked
AccuSound Corporation manufactures printed circuits for stereo amplifiers. A common product defect is a "drift" caused by failure to maintain precise heat levels during the production process. Rejects from the 100 percent testing program can be reworked to acceptable levels if the defect is drift. However, in a recent analysis of customer complaints, Marie Allen, the assistant controller, and the quality control engineer determined that normal rework does not bring the circuits up to standard. Sampling showed that about half of the reworked circuits will fail after extended amplifier operation. The incidence of failure in the reworked circuits is projected to be about 10 percent over five years. 2. Choose what ethical responsibilities should be accepted by: (a) the controller, (b) the quality control engineer, and (c) the plant manager. c. The ethical responsibilities that should be accepted by the plant manager are:
Responsibilities for product quality and cost. checked Protect overall company interests. checked Ensuring that products meet quality standards. checked Inform the board of directors of any problems that could affect the well-being of the firm. checked
AccuSound Corporation manufactures printed circuits for stereo amplifiers. A common product defect is a "drift" caused by failure to maintain precise heat levels during the production process. Rejects from the 100 percent testing program can be reworked to acceptable levels if the defect is drift. However, in a recent analysis of customer complaints, Marie Allen, the assistant controller, and the quality control engineer determined that normal rework does not bring the circuits up to standard. Sampling showed that about half of the reworked circuits will fail after extended amplifier operation. The incidence of failure in the reworked circuits is projected to be about 10 percent over five years. 2. Choose what ethical responsibilities should be accepted by: (a) the controller, (b) the quality control engineer, and (c) the plant manager. b. The ethical responsibilities that should be accepted by the quality control engineer are:
Responsibilities for product quality. checked Protect overall company interests. checked Informing the plant manager and his staff in this matter. checked Working with others in the company to find solutions.
The largest professional association for management accountants in the U.S. is: The American Institute of Certified Public Accountants. The Institute of Management Accountants (IMA). The Chartered Institute of Management Accountants. The Financial Executives International (FEI). The Association for Chartered Global Management Accountants.
The Institute of Management Accountants (IMA).
Susan Lopez, a consultant with Deloitte & Young, has just begun an engagement at Four Corners Airlines, which is based in Santa Fe, New Mexico. The company has fallen on hard times of late despite record profits for the rest of the airline industry. Management is somewhat set in its ways and could probably use some "new blood," as the most recent hire to the firm's executive team was 12 years ago. Required:1-a. What is a balanced scorecard?
The balanced scorecard is a business model that helps to assess a firm's competitive position and ensures that the firm is progressing toward long-term survival.
There is a strong trend towards the presentation of both financial and nonfinancial data.
True
Decision making involves choosing among available alternatives
True
Managerial accounting reports assist management through the attention-directing function but rarely solve a decision problem
True
Contemporary managerial accounting systems are focusing more and more on
activities that occur at all levels of the organization.
Managerial accounting is used by
all company managers
Managerial accounting information is vital in
all types of organizations
The process of making sense of big data and developing true and helpful insights from it is called data
analytics
The process of performing big data analytics and drawing insights from it that are useful for decision makers is called data
analytics/science
Cross-functional managerial teams are formed to
make decisions, planning, address operational problems.
An important role in a company's data governance is played by
managerial accounting
A set of tools, systems and perspectives that add value to an organization by supporting five major objectives is the basis of
managerial accounting activity
Tools and perspectives to help managers achieve their organization's goals are provided by
managerial accounting.
A key purpose of managerial accounting is to
motivate employees to direct their efforts toward achieving the organization's goals.
Managerial accountants: often work with regulators like the SEC. are responsible for issuing a company's annual financial statements. are found primarily at lower levels of the organizational hierarchy. are found primarily at higher levels of the organizational hierarchy. often work on cross-functional teams and are located throughout an organization.
often work on cross-functional teams and are located throughout an organization.
Managers in staff positions are
only indirectly involved in operational activities
The focus of managerial accounting is on the needs of users inside the
organization
The purpose of the CPA designation is to assure the competence of those working
outside of organizations.
The process of developing a detailed financial and operational description of anticipated operations is part of the management activity of
planning
Preparation of a budget is part of the
planning activity
Managerial accountants routinely play a major role in cross-functional management teams formed to make decisions, engage in
planning or address operational problems
When managers consider factors such as equipment downtime, employee fatigue and unexpected interruptions, they are determining
practical capacity
Directing operational activities mean
running the organization on a daily basis
The upper limit on production of goods and services if everything works perfectly is called
theoretical capacity.
The upper limit on the production of goods and services if everything works perfectly is known as: practical capacity. theoretical capacity. utilized capacity. management capacity. capacity maximization.
theoretical capacity.
The focus of managerial accounting is on the needs of
users inside the organization
A set of linked, value-creating activities is called a(n)
value chain
Susan Lopez, a consultant with Deloitte & Young, has just begun an engagement at Four Corners Airlines, which is based in Santa Fe, New Mexico. The company has fallen on hard times of late despite record profits for the rest of the airline industry. Management is somewhat set in its ways and could probably use some "new blood," as the most recent hire to the firm's executive team was 12 years ago. 4. Do you see any problems with management's prior focus on only one measure (i.e., load factor)?
yes
