Test Bank for Cost Management Essay

Answers 1. A.Competence, confidentiality, integrity, and relevance. – Given 2. B. Competence, confidentiality, integrity, and credibility. 3. C. Competence, confidentiality, independence, and objectivity. 4. D. Competence, accuracy, integrity, and independence. According to the IMA Code of Ethics, what should a management accountant do if a significant ethical situation can’t be resolved? Mark – Incorrect Answers 1. A.The accountant should confront the guilty party and demand the unethical action be stopped. 2. B. The accountant should try to rationalize and understand the position of the other party. 3. C. The accountant should say nothing about the matter until he or she has retired. 4. D. The accountant should first discuss the matter with the immediate supervisor. The strategy map is a tool that is used Mark – Incorrect Answers 1. A.as one of the key aspects of the contemporary management environment 2. B. to enhance the sustainability of the organization 3. C. to link the perspectives of the balanced scorecard 4. D. to organize the critical success factors of a company 5. E. to implement strategy Which of the following is the primary user of management accounting information regarding business units? Mark – Incorrect Answers 1. A. Company management. 2. B. Investors. 3. C. Creditors. 4. D. Industry and governmental organizations. When managers produce value for the customer, their orientation consists of all the following except: Mark – Incorrect Answers 1. A.Quality and Service. 2. B. Timeliness of delivery. 3. C. The ability to respond to the customer`s desire for specific features. 4. D. State of the art manufacturing facilities. If a firm decided to reevaluate and reorganize the way it did business, in hopes of creating competitive advantage, by changing or decreasing jobs, the company would be using which of the following management technique? Mark – Incorrect Answers 1. A.The value chain. 2. B. Business intelligence. 3. C. Business process improvement. 4. D. Product reevaluation. 5. E. Life cycle costing. Which of the following is not considered part of the Institute of Management Accountants’ definition of management accounting? Mark – Incorrect Answers 1. A.Partnering in management decision making. 2. B. Devising planning and performance management systems. 3. C. Gathering, summarizing, analyzing, and providing information. 4. D. Providing expertise in financial reporting and control. 5. E. Assisting management in the formulation and implementation of an organization`s strategy. The difference between wholesalers and retailers is: Mark – Incorrect Answers 1. A.Wholesalers are merchandisers that sell directly to customers whereas retailers are merchandisers that sell to other merchandisers. 2. B. Wholesalers are merchandisers that sell to other merchandisers whereas retailers are merchandisers that sell directly to consumers. 3. C. Wholesalers are merchandisers that sell directly to the government whereas retailers are merchandisers that sell to other merchandisers. 4. D. Wholesalers are merchandisers that sell directly to customers whereas retailers are merchandisers that sell directly to the government. 5. E. There is no difference between wholesalers and retailers. Cost management has moved from a traditional role of product costing and operational control to a broader strategic focus, which places an emphasis on: Mark – Incorrect Answers 1. A.Competitive pricing. 2. B. Domestic marketing. 3. C. Short-term thinking. 4. D. Strategic thinking. 5. E. Independent judgment. Target costing: Mark – Incorrect Answers 1. A.Determines cost based on an expected market demand for the product. 2. B. Determines cost based on a budget. 3. C. Determines cost based on standard cost. 4. D. Determines cost based upon market price and desired profit. Cost management information typically is the responsibility of the: Mark – Incorrect Answers 1. A.Chief Financial Officer. 2. B. Controller. 3. C. Treasurer. 4. D. Chief Information Officer. A practical example of when the theory of constraints would not be an appropriate management technique to use would be: Mark – Incorrect Answers 1. A.Long lines at checkout stands. 2. B. Busy signals on Internet server sites. 3. C. One critical production process provides 60 parts/min. output, compared with a company-wide output of 90 parts/min. 4. D. Balanced, fast flow of product through the plant. A company’s management accountant is trying to improve the way costs are allocated within the company. Currently, several corporate expenses are grouped together and labeled â€Å"overhead.† If the accountant wanted to use activity-based costing (ABC) to help solve the problem, what should she do? Mark – Incorrect Answers 1. A. She should try to map the departments` costs to their cost objects, and then charge each department based on those cost relationships. 2. B. She should research how the company`s competitors are allocating their costs, and then implement one of those strategies. 3. C. She should look for bottlenecks within the production process, and try to eliminate them, thus reducing costs. 4. D. She should examine the firm`s value chain and apply target costing before adopting ABC. Which of the following is not a contemporary management technique used by the management accountant to respond to the changing business environment? Mark – Incorrect Answers 1. A.Enterprise risk management 2. B. Lean manufacturing 3. C. Life cycle costing 4. D. Enterprise sustainability Corporate management is required to identify and solve problems from a cross-functional view. Instead of viewing a problem as related to a specific business function, management solves these problems by combining skills from different functions simultaneously. This approach is called: Mark – Incorrect Answers 1. A.Inclusive approach. 2. B. Integrative approach. 3. C. Intra-function approach. 4. D. Multilateral approach. Strategic management can be defined as the development of a sustainable: Mark – Incorrect Answers 1. A.Chain of command. 2. B. Competitive position. 3. C. Cash flow. 4. D. Business entity. 5. E. Company image. Which of the following does not represent a main focus of cost management information? Mark – Incorrect Answers 1. A.Strategic management. 2. B. Performance measurement. 3. C. Planning and decision making. 4. D. Preparation of financial statements. 5. E. Internal auditing and control. In keeping with the current trend of increased strategic planning, how have management accountants changed their use of life-cycle costing? Mark – Incorrect Answers 1. A.They have now shifted their focus from R&D costs to marketing and promotion costs. 2. B. They have turned from a sole focus on manufacturing costs to a much wider outlook, taking into account costs from the entire product lifecycle. 3. C. They stopped looking at the entire life-cycle, and now focus their attention on product design costs. 4. D. Accountants don`t use life-cycle costing, that task is left for the operations manager. Which of the following professional certificates is considered to be the most relevant for dealing with cost management issues? Mark – Incorrect Answers 1. A.The CPA, which is monitored differently for each state in the U.S. 2. B. The CMA, which is administered through the Institute of Management Accountants. 3. C. The CFA, since its program focuses on the broadest range of topics and responsibilities for financial analysis. 4. D. The CPA, CMA, and CFA are viewed as equally relevant, since all three require an exam, as well as specific background and experience requirements. In a local factory, employees are rewarded for finding new and better ways of changing the way they work. This company is motivating its employees to use what management technique? Mark – Incorrect Answers 1. A.Benchmarking. 2. B. Activity-Based Costing. 3. C. Theory of Constraints. 4. D. Continuous Improvement. 5. E. Total Quality Management. All of the following are examples of total quality management practices except: Mark – Incorrect Answers 1. A.Redesign of a product to reduce its parts by 50 percent. 2. B. Reduction in the movement required in a manufacturing job. 3. C. Separating the sales and services functions. 4. D. Raising raw material quality standards. 5. E. Cross-training assembly line workers to cover sick leave absences. Which of the following aspects of the contemporary business environment involves using statistical methods such as regression or correlation analysis to predict consumer behavior, to measure customer satisfaction, or to develop models for setting prices, among other uses? Mark – Incorrect Answers 1. A. Business Intelligence 2. B. Target Costing 3. C. Life Cycle Costing 4. D. Benchmarking 5. E. Business Process Improvement Management accounting information plays a critical role in all of the following management functions except: Mark – Incorrect Answers 1. A.Profit planning. 2. B. Executive compensation. 3. C. Planning and decision making. 4. D. Hiring a new CFO. 5. E. Preparing financial statements for the SEC. The five steps for strategic decision making include all of the following except: Mark – Incorrect Answers 1. A.Identify the alternative actions 2. B. Gather, summarize, and report accounting information 3. C. Determine the strategic issues surrounding the problem 4. D. Choose and implement the desired alternative 5. E. Provide an ongoing evaluation of the effectiveness of implementation A local area consulting firm is trying to increase the long-term strategic focus of its company reports. Therefore, the firm has decided to use the balanced scorecard. What type of new information that the company currently doesn’t use in its financial reports, should the company include? Mark – Incorrect Answers 1. A. Non-financial information, including customer satisfaction, innovation, etc. 2. B. Additional financial information, such as profitability measures and market value. 3. C. Product life cycle information. 4. D. Supplemental accounting reports. Which of the following is not a major change in the business environment that has affected the way many companies think about conducting business? Mark – Incorrect Answers 1. A.An increased focus on the customer, especially their opinions about functionality and quality. 2. B. A growing emphasis on globalization – new markets for products and new competitors. 3. C. A larger number of companies are starting to use advanced information technologies, such as business intelligence. 4. D. The development of improved cost management methods. Which of the following aspects of a company would not be considered a critical success factor, for a company that competes on differentiation? Mark – Incorrect Answers 1. A.Cutting edge research and development. 2. B. Excellent customer service. 3. C. Award-winning product quality. 4. D. Continually beating competitors to the market with new, innovative products. 5. E. High level of production efficiency. Target costing determines the desired cost for a product upon the basis of a given competitive price such that the product will: Mark – Incorrect Answers 1. A.Earn at least a small profit. 2. B. Earn a desired profit. 3. C. Earn the maximum profit. 4. D. Break even. 5. E. Sell the highest volume. 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