Cost Accounting A Managerial Emphasis, 14th Edition By Charles T. Horngren Test Bank

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Cost Accounting A Managerial Emphasis, 14th Edition By Charles T. Horngren Test Bank

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COMPLETE TEST BANK WITH ANSWERS

 

Cost Accounting A Managerial Emphasis, 14th Edition By  Charles T. Horngren Test Bank

 

Sample  Questions     

 

 

 

Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 1 The Accountants Role in the Organization

 

Objective 1.1

 

1) Management accounting:

 

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

 

  1. provides information about the company as a whole
  2. reports information that has occurred in the past that is verifiable and reliable
  3. provides information that is generally available only on a quarterly or annual basis

Answer: A

 

Diff: 2

Terms: treasury

Objective: 1

AACSB: Reflective thinking

 

  • Managers use management accounting information to ________ strategy. A) choose

 

  1. B) communicate C) implement

 

  1. D) All of these answers are correct. Answer: D

 

Diff: 1

Terms: total quality management (TQM)

Objective: 1

AACSB: Analytical skills

 

  • Financial accounting:
  1. focuses on the future and includes activities such as preparing next years operating budget
  2. must comply with GAAP (generally accepted accounting principles)

 

  1. reports include detailed information on the various operating segments of the business such as product lines or departments

 

  1. is prepared for the use of department heads and other employees

 

Answer:  B

Diff: 2

Terms: financial accounting

Objective: 1

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Copyright 2012 Pearson Education, Inc.

 

 

  • The person most likely to use ONLY financial accounting information is a: A) factory shift supervisor

 

  1. B) vice president of operations C) current shareholder

 

  1. D) department manager Answer: C

 

Diff: 1

Terms: financial accounting

Objective: 1

AACSB: Analytical skills

 

  • Which of the following people is LEAST likely to use management accounting information? A) the controller

 

  1. B) a shareholder evaluating a stock investment C) the treasurer

 

  1. D) an assembly department supervisor Answer: B

 

Diff: 1

Terms: treasury

Objective: 1

AACSB: Analytical skills

 

  • Financial accounting provides the primary source of information for:
  1. decision making in the finishing department
  2. improving customer service
  3. preparing the income statement for shareholders
  4. planning next years operating budget

Answer: C

Diff: 2

Terms: financial accounting

Objective: 1

AACSB: Reflective thinking

 

  • Which of the following descriptors refers to management accounting information? A) It is verifiable and reliable.

 

  1. B) It is driven by rules.
  2. C) It is prepared for shareholders.

 

  1. D) It provides reasonable and timely estimates. Answer: D

 

Diff: 2

Terms: treasury

Objective: 1

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

 

 

 

2

 

Copyright 2012 Pearson Education, Inc.

 

 

  • Which of the following statements refers to management accounting information? A) There are no regulations governing the reports.

 

  1. B) The reports are generally delayed and historical.

 

  1. C) The audience tends to be stockholders, creditors, and tax authorities. D) It primarily measures and records business transactions.

 

Answer: A

Diff: 2

Terms: treasury

Objective: 1

AACSB: Reflective thinking

 

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

 

  1. A) stockholders

 

  1. B) sales representatives C) production supervisors D) managers

 

Answer: A

Diff: 1

Terms: treasury

Objective: 1

AACSB: Analytical skills

 

  • Management accounting information includes:
  1. tabulated results of customer satisfaction surveys
  2. the cost of producing a product
  3. the percentage of units produced that are defective
  4. All of these answers are correct.

Answer: D

Diff: 1

Terms: treasury

Objective: 1

AACSB: Reflective thinking

 

11) Cost accounting:

 

  1. provides information on the efficiency of factory labor
  2. provides information on the cost of servicing commercial customers
  3. provides information on the performance of an operating division
  4. All of these answers are correct.

Answer: D

Diff: 1

Terms: cost accounting

Objective: 1

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

 

3

 

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  • Which of the following types of information are used in management accounting? A) financial information

 

  1. B) nonfinancial information

 

  1. C) information focused on the long term D) All of these answers are correct. Answer: D

 

Diff: 2

Terms: treasury

Objective: 1

AACSB: Reflective thinking

 

  • Modern cost accounting plays a role in:
  1. planning new products
  2. evaluating operational processes
  3. controlling costs

 

  1. All of these answers are correct. Answer: D

 

Diff: 1

Terms: cost accounting

Objective: 1

AACSB: Reflective thinking

 

14) A data warehouse or infobarn:

  1. is reserved for exclusive use by the CFO
  2. is primarily used for financial reporting purposes
  3. stores information used by different managers for multiple purposes
  4. gathers only nonfinancial information

Answer: C

Diff: 1

Terms: cost accounting

Objective: 1

AACSB: Reflective thinking

 

15) Cost accounting provides all of the following EXCEPT:

  1. information for management accounting and financial accounting
  2. pricing information from marketing studies
  3. financial information regarding the cost of acquiring resources

 

  1. nonfinancial information regarding the cost of operational efficiencies Answer: B

 

Diff: 2

Terms: cost accounting

Objective: 1

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

 

 

 

4

 

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  • Management accounting includes all of the following EXCEPT A) implementing strategies

 

  1. B) developing budgets

 

  1. C) preparing special studies and forecasts D) preparing the statement of cash flows Answer: D

 

Diff: 1

Terms: treasury

Objective: 1

AACSB: Reflective thinking

 

  • Financial accounting is concerned primarily with:
  1. external reporting to investors, creditors, and government authorities
  2. cost planning and cost controls
  3. profitability analysis
  4. providing information for strategic and tactical decisions

Answer: A

Diff: 2

Terms: financial accounting

Objective: 1

AACSB: Reflective thinking

 

  • Financial accounting provides a historical perspective, whereas management accounting emphasizes:

 

  1. A) the future
  2. B) past transactions

 

  1. C) a current perspective D) reports to shareholders Answer: A

 

Diff: 1

Terms: financial accounting

Objective: 1

AACSB: Reflective thinking

 

  • An Enterprise Resource Planning System can best be described as:

 

  1. a collection of programs that use a variety of unconnected databases

 

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

 

  1. a database that is primarily used by a purchasing department to determine the correct amount of a particular supply item to purchase

 

  1. a sophisticated means of linking two or more companies to facilitate their planning processes Answer: B

 

Diff: 1

Terms: cost accounting

Objective: 1

AACSB: Use of Information Technology

 

 

 

 

 

 

 

5

 

Copyright 2012 Pearson Education, Inc.

 

 

  • 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:

 

  1. A) value chain management B) enterprise resource planning C) cost management

 

  1. D) customer value management Answer: C

 

Diff: 1

Terms: cost management

Objective: 1

AACSB: Analytical skills

 

  • Management accounting information focuses on external reporting.

 

Answer: FALSE

Explanation:  Management accounting information focuses on internal reporting.

Diff: 1

Terms: treasury

Objective: 1

AACSB: Reflective thinking

 

  • Cost management is narrowly focused on a continuous reduction of costs. Answer: FALSE

 

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

 

Diff: 2

Terms: cost management

Objective: 1

AACSB: Analytical skills

 

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

 

Answer: FALSE

 

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

 

Diff: 1

Terms: treasury

Objective: 1

AACSB: Analytical skills

 

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

 

Answer: TRUE

Diff: 1

Terms: cost accounting

Objective: 1

AACSB: Analytical skills

 

 

 

 

 

 

 

6

 

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

 

Answer: TRUE

Diff: 1

Terms: financial accounting

Objective: 1

AACSB: Analytical skills

 

  • Financial accounting is broader in scope than management accounting.

Answer: FALSE

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

Diff: 2

Terms: financial accounting, management accounting

 

Objective: 1

AACSB: Reflective thinking

 

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

 

Answer: TRUE

Diff: 2

Terms: cost accounting

Objective: 1

AACSB: Reflective thinking

 

  • Cost management provides information that helps increase value for customers. Answer: TRUE

 

Diff: 1

Terms: cost management

Objective: 1

AACSB: Reflective thinking

 

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

 

Answer: FALSE

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

Diff: 1

Terms: treasury

Objective: 1

AACSB: Ethical reasoning

 

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

 

Answer: TRUE

Diff: 1

Terms: treasury

Objective: 1

AACSB: Reflective thinking

 

 

 

 

 

 

7

 

Copyright 2012 Pearson Education, Inc.

 

 

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

 

Answer: TRUE

Diff: 1

Terms: treasury

Objective: 1

AACSB: Use of Information Technology

 

  • Cost accounting provides information only for management accounting purposes.

Answer: FALSE

Explanation: Cost accounting provides information for financial accounting as well as for management

accounting purposes.

 

Diff: 1

Terms: cost accounting

Objective: 1

AACSB: Reflective thinking

 

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

 

Answer: TRUE

Diff: 1

Terms: cost management

Objective: 1

AACSB: Reflective thinking

 

  • For each report listed below, identify whether the major purpose of the report is for (1) routine internal reporting, (2) nonroutine internal reporting, or for (3) external reporting to investors and other outside parties.

 

Item:

  1. study detailing sale information of the top-ten selling products
  2. weekly report of total sales generated by each store in the metropolitan area
  3. annual Report sent to shareholders
  4. monthly report comparing budgeted sales by store to actual sales

 

Answer:

  1. (2) nonroutine internal reporting
  2. (1) routine internal reporting
  3. (3) external reporting to investors and other outside parties
  4. (1) routine internal reporting

Diff: 2

Terms: treasury

Objective: 1

AACSB: Analytical skills

 

 

 

 

 

 

 

 

 

 

8

 

Copyright 2012 Pearson Education, Inc.

 

 

35) Describe management accounting and financial accounting.

 

Answer: Management accounting provides information to internal decision makers of the business such as top executives, managers, sales representatives, and production supervisors. Its purpose is to help managers predict and evaluate future results. Reports are generated often and usually broken down into smaller reporting divisions such as department or product line. There are no rules to be complied with since these reports are for internal use only. Management accounting embraces more extensively such topics as the development and implementation of strategies and policies, budgeting, special studies and forecasts, influence on employee behavior, and nonfinancial as well as financial information.

 

Financial accounting, by contrast, provides information to external decision makers such as investors

and creditors. Its purpose is to present a fair picture of the financial condition of the company. Reports

are generated quarterly or annually and report on the company as a whole. The financial statements must

comply with GAAP (generally accepted accounting principles). A CPA audits, or verifies, that the

 

GAAP are being followed.

Diff: 2

Terms: treasury

Objective: 1

AACSB: Reflective thinking

 

  • Is financial accounting or management accounting more useful to an operations manager? Why? Answer: Management accounting is more useful to an operations manager because management accounting reports operating results by department or unit rather than for the company as a whole, it includes financial as well as nonfinancial data such as on-time deliveries and cycle times, and it includes quantitative as well as qualitative data such as the type of rework that was needed on defective units. Diff: 3

 

Terms: treasury

Objective: 1

AACSB: Reflective thinking

 

  • Is it possible to have an active cost management program without an Enterprise Resource Planning (ERP) System?

 

Answer: Yes, an active cost management program can occur without an Enterprise Resource Planning (ERP) System. Cost management is a philosophy that guides management in their short-run and long-run planning and control decisions that increase value for customers and lower costs of products and services. Cost management is not dependent on any particular system or database, but it is rather an overall philosophy of operation.

 

Diff: 2

Terms: cost management

Objective: 1

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

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  • What competitive advantage could a company obtain from a successful cost management program? Answer: There are three broad outcomes from a successful cost management program: 1) costs are reduced with no loss in customer value. In this scenario, a company might gain a competitive advantage by lowering its price with no loss in profit, or maintain the same price and increase profit; 2) customer value is increased with no change in costs. This scenario might increase customer satisfaction resulting in increased customer loyalty and perhaps increase the overall demand for the product; 3) customer value might be increased while costs are reduced simultaneously. This scenario would result in the benefits described in both 1) and 2).

 

Diff: 2

Terms: cost management

Objective: 1

AACSB: Reflective thinking

 

Objective 1.2

 

1) Which of the following statements concerning an organizations strategy is NOT true?

 

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

 

  1. Management accountants provide input to help managers formulate strategy.
  2. A good strategy will always overcome poor implementation.

 

  1. Businesses usually follow one of two broad strategies: offering a quality product at a low price, or offering a unique product or service priced higher than the competition.

 

Answer: C

Diff: 2

Terms: total quality management (TQM)

Objective: 2

AACSB: Analytical skills

 

2) Strategy specifies:

  1. how an organization matches its own capabilities with the opportunities in the marketplace
  2. standard procedures to ensure quality products
  3. incremental changes for improved performance
  4. the demand created for products and services

Answer: A

 

Diff: 2

Terms: total quality management (TQM)

Objective: 2

 

AACSB: Reflective thinking

 

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

 

  1. A) Who are our most important customers?
  2. B) What substitute products exist in the marketplace?

 

  1. C) Does the strategy comply with GAAP (Generally Accepted Accounting Principles)? D) Will adequate cash be available to implement the strategy?

 

Answer: C

Diff: 2

Terms:  total quality management (TQM)

Objective: 2

AACSB: Analytical skills

 

 

10

 

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  • Strategy is formulated by answering all of the following EXCEPT: A) Who are our most important customers?

 

  1. B) Is industry demand growing or shrinking?
  2. C) Will our external auditors certify our strategy?

 

  1. D) How sensitive are purchasers to price, quality, and service? Answer: C

 

Diff: 3

Terms: total quality management (TQM)

Objective: 2

AACSB: Analytical skills

 

  • In designing strategy, a company must match the opportunities and threats in the marketplace with: A) those of the CFO (Chief Financial Officer)

 

  1. B) its resources and capabilities C) branding opportunities

 

  1. D) capabilities of current suppliers Answer: B

 

Diff: 2

Terms: total quality management (TQM)

Objective: 2

AACSB: Analytical skills

 

  • Which of the following statements about customer value is NOT true?
  1. Customer value is shown in a corporations balance sheet.
  2. Creating value for customers is an important part of planning and implementing strategy.

 

  1. How our product delivers customer value should be determined as part of a companys strategy formulation.

 

  1. It is possible to simultaneously lower cost and increase customer value.

Answer: A

Diff: 1

Terms: total quality management (TQM)

Objective: 2

AACSB: Analytical skills

 

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

 

Answer: FALSE

 

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

 

Diff: 1

Terms: total quality management (TQM)

Objective: 2

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

 

 

11

 

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  • Southwest Airlines is an example of a company that pursues a product differentiation strategy. Answer: FALSE

 

Explanation: Southwest Airlines pursues a cost leadership strategy.

Diff: 1

Terms: total quality management (TQM)

Objective: 2

AACSB: Analytical skills

 

  • The best-designed strategies are valuable whether or not they are effectively implemented. Answer: FALSE

 

Explanation: Implementation is essential or the strategy is useless.

Diff: 1

Terms: total quality management (TQM)

Objective: 2

AACSB: Analytical skills

 

  • The key to a companys success is creating value for customers while differentiating itself from its competitors.

 

Answer: TRUE

Diff: 1

Terms: total quality management (TQM)

Objective: 2

AACSB: Reflective thinking

 

  • The key to a companys success is always to be the low cost producer in a particular industry. Answer: FALSE

 

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

Diff: 2

Terms: total quality management (TQM)

Objective: 2

AACSB: Reflective thinking

 

  • 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. Answer: TRUE

 

Diff: 2

Terms: total quality management (TQM)

Objective: 2

AACSB: Reflective thinking

 

  • Management accountants should have little or no role in deciding on a companys strategy. Answer: FALSE

 

Explanation: Management accountants should play a significant role in deciding on a companys strategy.

 

Diff: 1

Terms: total quality management (TQM)

Objective:  2

AACSB: Reflective thinking

 

 

 

 

12

 

Copyright 2012 Pearson Education, Inc.

 

 

  • Companies can decide on an appropriate strategy based strictly on internally available information. Answer: FALSE

 

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

 

Diff: 1

Terms: total quality management (TQM)

Objective: 2

AACSB: Reflective thinking

 

  • Strategic cost management describes cost management that specifically focuses on strategic issues. Answer: TRUE

 

Diff: 1

Terms: strategic cost management

Objective: 2

AACSB: Reflective thinking

 

  • Identifying a companys most important customers does NOT help formulate strategy.

Answer: 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? Diff: 1

 

Terms: strategic cost management

Objective: 2

AACSB: Analytical skills

 

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

 

Answer: TRUE

Diff: 1

Terms: total quality management (TQM)

Objective: 2

AACSB: Analytical skills

 

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

 

  1. Primary users
  2. Focus and emphasis

 

  1. Rules of measurement and reporting Answer:

 

  1. 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.

 

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

 

  1. 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.

 

Diff: 2

Terms: financial accounting, management accounting

Objective: 2

AACSB: Analytical skills

 

 

13

 

Copyright 2012 Pearson Education, Inc.

 

 

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

 

Answer: 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.

 

Companies follow one of two broad strategies. One is provide a quality product or service at low prices.

The other is to compete on their ability to offer a unique product or service that is generally offered at a

higher price.

Diff: 2

Terms: total quality management (TQM)

Objective: 2

AACSB: Reflective thinking

 

  • Briefly describe how managers make use of management accounting information. Answer:

 

ONE: To choose strategy, to communicate it, and to determine how best to implement it.

 

TWO: 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.

 

THREE: To control business operations that includes comparing actual results to the budgeted results

and taking corrective action when needed.

Diff: 2

Terms:  strategy, planning

Objective: 2

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

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  • Generally, companies follow one of two broad strategies: offering a quality product at a low price, or offering a unique product or service priced higher than the competition. Assume you are opening a small food outlet across the street from your campus. How might that business be operated under each of the two broad strategies? Consider the following specific operational areas:

 

  1. target customers
  2. products offered
  3. product pricing
  4. location choice
  5. advertising content
  6. advertising media

 

Answer: The purpose of this question is to explore some of the differences in business operations as a result of a broad strategic choice. Answers will differ from student to student, but you should see some specific themes.

 

Operational Area Low Price Strategy Differential Strategy
Target customers Target customers might be Target customers might be more
  students on a tight budget wealthy students, faculty, or
    perhaps neighbors who live
    nearby.
Products offered Few products, heavy emphasis High quality products, probably a
  on tight cost control, probably set reasonable choice, restaurant
  up as a high volume operation. might have a lot of ambience.
Product pricing Priced at or lower than the Higher priced products.
  competition in the area.  
Location choice Convenient to the target Not as convenient, perhaps in a
  customers. higher-end shopping or
    entertainment area. Customers
    might seek out the high quality
    and be willing to travel a bit for
    it.
Advertising content Advertising would emphasize the Advertising would emphasize
  low price of the products offered. quality or ambience.
Advertising media Media that would be looked at byMedia that would be looked at by
  the target customers, such as the target customer, local
  student newspapers. magazines and newspapers.

 

Diff: 3

Terms: total quality management (TQM)

Objective: 2

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

 

 

 

 

15

 

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  • Generally, companies follow one of two broad strategies: offering a quality product at a low price, or offering a unique product or service priced higher than the competition. Is it possible to follow a strategy that is in the middle?

 

Answer: There is some dispute about the correct answer to this question. Some will argue that it is not good for companies to get caught in the middle because the customer might get confused as to whether or not the company is competing on price or is trying to make some other appeal. If the customer is confused about how the company is giving them value, they might perceive they are getting no value and abandon the product to a competitor with a clearer customer value proposition. The other side of the argument is that cost management is a necessary part of any strategy and even if the company chooses to pursue a differential strategy, management of the company should always be seeking ways to manage costs and increase customer value simultaneously regardless of their strategy. The student should be able to articulate one or the other arguments coherently.

 

Diff: 2

Terms: total quality management (TQM)

Objective: 2

AACSB: Reflective thinking

 

Objective 1.3

 

  • Place the four business functions in the order they appear along the value chain: Customer service

 

Design Marketing Production

 

  1. Customer Service, Design, Production, Marketing
  2. Customer Service, Marketing, Production, Design
  3. Design, Production, Marketing, Customer Service

 

  1. Design, Customer Service, Production, Marketing Answer: C

 

Diff: 2

Terms: value chain

Objective: 3

AACSB: Reflective thinking

 

  • R&D, production, and customer service are business functions that are all included as part of: A) the value chain

 

  1. B) benchmarking C) marketing

 

  1. D) the supply chain Answer: A

 

Diff: 1

Terms: value chain

Objective: 3

AACSB: Analytical skills

 

 

 

 

 

 

 

 

 

16

 

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  • The value chain is the sequence of business functions in which: A) value is deducted from the products or services of an organization
  1. B) value is proportionately added to the products or services of an organization

 

  1. C) products and services are evaluated with respect to their value to the supply chain D) usefulness is added to the products or services of an organization

 

Answer: D

Diff: 2

Terms: value chain

Objective: 3

AACSB: Reflective thinking

 

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

 

  1. A) Research and development

 

  1. B) Design of products, services, or processes C) Production

 

  1. D) Marketing Answer: A Diff: 1

 

Terms: research and development

Objective: 3

AACSB: Analytical skills

 

  • ________ is the detailed planning and engineering of products, services, or processes.
  1. Distribution
  2. Design of products, services, or processes
  3. Production
  4. Marketing

Answer:  B

Diff: 1

Terms: design of products, services, or processes

Objective: 3

AACSB: Reflective thinking

 

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

 

  1. A) Research and development B) Customer service

 

  1. C) Production D) Marketing Answer: C Diff: 1

 

Terms: production

Objective: 3

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

17

 

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

 

  1. A) Distribution
  2. B) Customer service

 

  1. C) Research and development D) Marketing

 

Answer: D

Diff: 1

Terms: marketing

Objective: 3

AACSB: Reflective thinking

 

  • ________ is the delivery of products or services to customers.

 

  1. Distribution
  2. Customer service
  3. Production

 

  1. Design of products, services, or processes Answer: A

 

Diff: 1

Terms: distribution

Objective: 3

AACSB: Reflective thinking

 

  • ________ is the after-sale support provided to customers. A) Distribution

 

  1. B) Customer service C) Production

 

  1. D) Marketing Answer: B Diff: 1

 

Terms: customer service

Objective: 3

AACSB: Reflective thinking

 

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

 

  1. A) Supply-chain analysis

 

  1. B) Customer relationship management C) Value-chain analysis

 

  1. D) Continuous quality improvement Answer: B

 

Diff: 1

Terms: customer relationship management

Objective: 3

AACSB: Use of Information Technology

 

 

 

 

 

 

 

 

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  • Customer relationship management initiatives use technology to coordinate all: A) production activities

 

  1. B) research activities
  2. C) customer-facing activities

 

  1. D) inventory management activities Answer: C

 

Diff: 1

Terms: customer relationship management

Objective: 3

AACSB: Use of Information Technology

 

  • ________ 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.

 

  1. A) Supply chain
  2. B) Key success factors

 

  1. C) Continuous improvement D) Customer focus Answer: A

 

Diff: 1

Terms: supply chain

Objective: 3

AACSB: Reflective thinking

 

  • Processing orders and shipping products or services to customers (also

called outbound logistics) is also known as

  1. customer focus
  2. distribution
  3. marketing

 

  1. supply chain Answer: B Diff: 2

 

Terms: value chain

Objective: 3

AACSB: Reflective thinking

 

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

 

  1. A) Cost-benefit approach B) Customer focus

 

  1. C) Customer relationship management D) Total quality management Answer: D

 

Diff: 2

Terms: quality

Objective: 3

AACSB: Reflective thinking

 

 

 

 

 

 

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

 

  1. B) quality

 

  1. C) cost and efficiency D) profit

 

Answer: D

Diff: 2

Terms: supply chain

Objective: 3

AACSB: Reflective thinking

 

  • Which of the following statements about a companys supply chain is true?
  1. A companys supply chain is always internal to a firm.
  2. A companys supply chain is always external to a firm.
  3. A companys supply chain is the same thing as a companys value chain.

 

  1. Management accountants provide information to enhance a companys supply chain. Answer: D

 

Diff: 1

Terms: supply chain

Objective: 3

AACSB: Communication

 

  • ________ 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.

 

  1. A) The value chain B) The supply chain

 

  1. C) Product differentiation D) Distribution Answer: B

 

Diff: 2

Terms: total quality management (TQM)

Objective: 3

AACSB: Reflective thinking

 

  • Whose perceptions of the companys products or services are the most important to the manager? A) board of directors perception

 

  1. B) customers perception C) presidents perception D) stockholders perception Answer: B

 

Diff: 2

Terms: total quality management (TQM)

Objective: 3

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

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Copyright 2012 Pearson Education, Inc.

 

 

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

 

  1. A) Total Quality Management B) Innovation

 

  1. C) Customer response time D) Cost and efficiency Answer: A

 

Diff: 2

Terms: total quality management (TQM)

Objective: 3

AACSB: Reflective thinking

 

  • Customers are demanding improved performance related to:

 

  1. reduced costs
  2. both reduced costs and increased quality
  3. lower costs, improved quality, and improved customer service
  4. All of these answers are correct.

Answer: D

Diff: 2

Terms: total quality management (TQM)

Objective: 3

AACSB: Analytical skills

 

21) Customer response time involves:

  1. the speed it takes a customer to respond to an advertisement and place an order
  2. the speed at which an organization responds to customer requests
  3. the speed it takes to develop a new product

 

  1. the speed it takes an organization to develop a Total Quality Management (TQM) program Answer: B

 

Diff: 2

Terms: total quality management (TQM)

Objective: 3

AACSB: Reflective thinking

 

  • Which of the following is NOT a way for a company to improve customer response time? A) Increase capacity of bottleneck operations.

 

  1. B) Purchase material in larger quantities. C) Use faster delivery procedures.

 

  1. D) Produce the product more quickly. Answer: B

 

Diff: 2

Terms: total quality management (TQM)

Objective: 3

AACSB: Analytical skills

 

 

 

 

 

 

 

 

 

 

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Copyright 2012 Pearson Education, Inc.

 

 

  • The supply chain refers to the sequence of business functions in which customer usefulness is added to products or services.

 

Answer: FALSE

 

Explanation: The value chain refers to the sequence of business functions in which customer usefulness is added to products or services.

 

Diff: 1

Terms: supply chain

Objective: 3

AACSB: Reflective thinking

 

  • An effective way to cut costs is to eliminate activities that do NOT improve the product attributes that customers value.

 

Answer: TRUE

Diff: 1

Terms: cost management

Objective: 3

AACSB: Reflective thinking

 

  • For optimal planning success it is best if each business function within the value chain is performed one at a time in sequence.

 

Answer: FALSE

 

Explanation: Optimally, success is achieved when two or more of the individual business functions work concurrently as a team.

 

Diff: 1

Terms: value chain

Objective: 3

AACSB: Analytical skills

 

  • For best results, cost management emphasizes independently coordinating supply chain activities within your company and with other companies that act as suppliers and customers.

 

Answer: TRUE

Diff: 2

Terms: cost management

Objective: 3

AACSB: Analytical skills

 

  • Technological innovation has led to longer product-life cycles and lessened the need to bring new products to market more rapidly.

 

Answer: FALSE

 

Explanation: Technological innovation has led to shorter product-life cycles and increased the need to bring new products to market more rapidly.

 

Diff: 1

Terms: design of products, services, or processes

Objective: 3

AACSB: Use of Information Technology

 

 

 

 

 

 

 

 

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Copyright 2012 Pearson Education, Inc.

 

 

  • Key success factors include cost, quality, timeliness, and innovation. Answer: TRUE

 

Diff: 1

Terms: value chain

Objective: 3

AACSB: Reflective thinking

 

  • Customers are demanding increased levels of performance in all aspects of the value chain and the supply chain.

 

Answer: TRUE

Diff: 1

Terms: value chain

Objective: 3

AACSB: Analytical skills

 

  • The supply chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers.

 

Answer: FALSE

 

Explanation: The value chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers.

 

Diff: 1

Terms: value chain

Objective: 3

AACSB: Reflective thinking

 

  • The supply chain always occurs within a single organization.

Answer: FALSE

Explanation: The supply chain can include organizations external to a single organization.

Diff: 1

Terms: supply chain

Objective: 3

AACSB: Analytical skills

 

  • Distribution refers to promoting and selling products or services to customers or prospective customers.

 

Answer: FALSE

 

Explanation: Marketing refers to promoting and selling products or services to customers or prospective customers.

 

Diff: 1

Terms: distribution

Objective: 3

AACSB: Communication

 

 

 

 

 

 

 

 

 

 

 

 

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Copyright 2012 Pearson Education, Inc.

 

 

  • The production component of the value chain refers detailed planning, engineering, and testing of products and processes.

 

Answer: FALSE

 

Explanation: The design of products, services, and processes component of the value chain refers detailed planning, engineering, and testing of products and processes.

 

Diff: 1

Terms: design of products, services, or processes

Objective: 3

AACSB: Reflective thinking

 

  • Management accountants might provide information on decisions on whether to buy a product from outside or manufacture it in-house.

 

Answer: TRUE

Diff: 1

Terms: cost-benefit approach

Objective: 3

AACSB: Communication

 

  • Key success factors are geared to improving customer satisfaction.

Answer: TRUE

Diff: 2

Terms: value chain

Objective: 3

AACSB: Analytical skills

 

  • Value chain refers to its value to the employee. Answer: FALSE

 

Explanation: Value chain refers to its value to the customer.

Diff: 1

Terms: value chain

Objective: 3

AACSB: Reflective thinking

 

  • Companies have to follow strict guidelines when designing a management accounting system. Answer: FALSE

 

Explanation: The design of a management accounting system should be guided by the challenges facing managers.

 

Diff: 1

Terms: treasury

Objective: 3

AACSB: Analytical skills

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Copyright 2012 Pearson Education, Inc.

 

 

  • Tracking what is happening in other companies is illegal. Answer: FALSE

 

Explanation: Tracking what is happening in other companies alerts managers to changes in their industry and can be accomplished in many legal ways such as visiting competitors Web sites and reviewing their financial statements.

 

Diff: 1

Terms: total quality management (TQM)

Objective: 3

AACSB: Analytical skills

 

  • Increased global competition is placing pressure on companies to reduce costs.

Answer: TRUE

Diff: 1

 

Terms: total quality management (TQM)

Objective: 3

AACSB: Analytical skills

 

  • The increasing pace of technological innovation has resulted in shorter product life cycles. Answer: TRUE

 

Explanation: The increasing pace of technological information has resulted in shorter product lifecycles.

Diff: 1

Terms: total quality management (TQM)

Objective: 3

AACSB: Use of Information Technology

 

  • A bottleneck occurs when the work to be performed exceeds the available capacity.

Answer: TRUE

Diff: 1

Terms: cost management

Objective: 3

AACSB: Reflective thinking

 

  • Classify each cost item into one of the business functions of the value chain, either (1) R&D, (2) design, (3) production, (4) marketing, (5) distribution, or (6) customer service.

 

Item:

  1. cost of samples mailed to promote sales of a new product
  2. labor cost of workers in the manufacturing plant
  3. bonus paid to a person with a 90% satisfaction rating in handling customers with complaints
  4. transportation costs for shipping products to retail outlets

Answer:

  1. (4) marketing
  2. (3) production
  3. (6) customer service

 

  1. (5) distribution Diff: 2

Terms: value chain

Objective: 3

AACSB: Analytical skills

 

 

 

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Copyright 2012 Pearson Education, Inc.

 

 

  • Classify each cost item of Ripon Printers into one of the business functions of the value chain, either

(1) R&D, (2) design, (3) production, (4) marketing, (5) distribution, or (6) customer service.

 

Item:

  1. cost of customer order forms
  2. cost of paper used in manufacture of books
  3. cost of paper used in packing cartons to ship books
  4. cost of paper used in display at national trade show
  5. depreciation of trucks used to transport books to college bookstores
  6. cost of the wood used to manufacture paper
  7. salary of the scientists attempting to find another source of printing ink

 

  1. cost of defining the book size so that a standard-sized box is filled to capacity Answer:

 

  1. (4) marketing
  2. (3) production
  3. (5) distribution
  4. (4) marketing
  5. (5) distribution
  6. (3) production
  7. (1) research and development
  8. (2) design

Diff: 2

Terms: value chain

Objective: 3

AACSB: Analytical skills

 

44) Describe the value chain and how it can help organizations become more effective.

 

Answer: A value chain is a sequence of business functions whose objective is to provide a product to a customer or provide an intermediate good or service in a larger value chain. These business functions include R&D, design, production, marketing, distribution, and customer service.

 

An organization can become more effective by focusing on whether each link in the chain adds value from the customers perspective and furthers the organizations objectives. Diff: 3

 

Terms: value chain

 

Objective: 3

AACSB: Reflective thinking

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Copyright 2012 Pearson Education, Inc.

 

 

  • Value chain and classification of costs, car company. General Motors incurs the following costs:

 

  1. Electricity costs for the plant assembling the Chevrolet Camaro b. Transportation costs for shipping the Camaro to dealers

 

  1. Payment to Shelby Designs for the design of the Camaro.
  2. Salary of an engineer working on the next generation of Camaros

 

  1. Cost of GM employees visit to an auto show to demonstrate the Camaro f. Testing the Camaro at the GM track

 

  1. Payment to television network for running Camaro advertisements
  2. Cost of brake pads purchased from outside supplier to be installed on the Camaro

 

Required:

Classify each of the cost items (a-h) into one of the business functions of the value chain.

 

  • Research and development
  • Design of products and processes
  • Production
  • Marketing
  • Distribution
  • Customer service

Answer:

  1. 3) Production
  2. 5) Distribution
  3. 2) Design of products and processes
  4. 1) Research and development
  5. 4) Marketing
  6. 2) Design of products and processes
  7. 4) Marketing
  8. 3) Production

Diff: 2

Terms: value chain

Objective: 3

AACSB: Reflective thinking

 

Objective 1.4

 

1) Place the five steps in the decision-making process in the correct order:

A = Obtain information

B = Make decisions by choosing among alternatives

 

C = Identify the problem and uncertainties

D = Implement the decision

E = Make predictions about the future

  1. C D B E A
  2. E D A B C
  3. C A E B D

 

  1. A E B D C Answer: C Diff: 2

 

Terms: decision model

Objective: 4

AACSB: Reflective thinking

 

 

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Copyright 2012 Pearson Education, Inc.

 

 

 

  • Planning consists of all of these areas EXCEPT: A) selecting organizational goals

 

  1. B) deciding how to attain the desired goals C) evaluating performance

 

  1. D) predicting results under various alternatives Answer: C

 

Diff: 2

Terms: planning

Objective: 4

AACSB: Reflective thinking

 

  • The most important planning tool is a ________. A) performance evaluation report

 

  1. B) balanced scorecard C) goal

 

  1. D) budget Answer: D Diff: 2 Terms: budget Objective: 4

 

AACSB: Analytical skills

 

  • A report showing the actual financial results for a period compared to the budgeted financial results for that same period would most likely be called a:

 

  1. A) strategic plan

 

  1. B) management forecast C) performance report D) revised plan Answer: C

 

Diff: 1

Terms: budget

Objective: 4

AACSB: Reflective thinking

 

  • The process of preparing a budget:
  1. forces coordination and communication across business functions
  2. increases accounting efficiencies
  3. reduces overcapacity
  4. promotes production automation

Answer: A

Diff: 2

Terms: budget

Objective: 4

AACSB: Analytical skills

 

 

 

 

 

 

 

 

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Copyright 2012 Pearson Education, Inc.

 

 

  • Planning includes all of the following EXCEPT A) identifying the problem and uncertainties.
  1. B) obtaining information.

 

  1. C) providing feedback to help with future decision making. D) making predictions about the future.

 

Answer: C

Diff: 1

Terms: planning

Objective: 4

AACSB: Reflective thinking

 

  • A budget:
  1. is a quantitative expression of a proposed management plan
  2. helps translate strategy into actions
  3. aids in the coordination and communication among various business functions
  4. All of these answers are correct.

Answer: D

Diff: 1

Terms: budget

Objective: 4

AACSB: Reflective thinking

 

  • A budget can serve as: A) a planning tool

 

  1. B) a control tool

 

  1. C) a basis for preparing financial statements D) a planning and control tool

 

Answer: D

Diff: 1

Terms: budget

Objective: 4

AACSB: Analytical skills

 

  • Employees ________ how their performance is measured. A) pay close attention to

 

  1. B) pay no attentio

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