Strategic Cost Management (FINALS)

1. All of the following are example of non-value-added activities except:

 Assembling
2. The major source of information for the activity management system is
 An activity-based costing system
3. The objective of the cost dimension of activity-based management is
 Improving the accuracy of cost assignments
4. What are the two dimensions of an activity-based management model?
 the cost dimension and the process dimension
5. Which of the following is true of the process dimension of an activity-based management
model?
 The process dimension aims at improving the accuracy of cost assignments.
6. The process dimension is not concerned with the issue or presence of waste in activities
 identify root causes of activity costs
7. The resource(s) consumed by the activity in producing its output is(are) called:
 Activity inputs
8. An activity output measure is
 the number of times an activity is performed
9. Which of the following is true of value-added activities?
 They are the activities that are to remain in business
10. An example of activity reduction would be
 reducing demand for customer complaint handling by improving product
quality.
11. Non-value-added activities
 are unnecessary inputs
12. Which of the following is a value-added activity?
 Processing
13. Which of the following process dimensions of the activity-based management model
deals with "how well"?
  performance measures
14. The effort to reduce costs of existing products and processes is named:
 Kaizen costing
15. Value-added costs equal standard quantity times
 standard price
16. A time-and-motion study revealed that it should take 3 hours to produce a product that
currently takes 7 hours to produce. Labor is $9 per hour. The non-value-added costs are
 $ 36
17. Mendelsohn company keeps 20 days of materials inventory on hand to avoid shutdowns
due to materials shortages. Carrying costs average $4,000 per day. Bach, Inc., a
competitor, keeps 10 days of inventory on hand, and the competitor's carrying costs
average $2,000 per day. The value-added costs are
 $-0-
18. A company has 19 days of finished goods inventory on hand to avoid stockouts. The
carrying costs of the inventory average $6,000 per day.The non-value-added costs are
 $114,000.
19. A time-and-motion study revealed that it should take 2 hours to produce a product that
currently takes 6 hours to produce. Labor is $8 per hour.The value-added costs are
 $16
20. Each unit of product requires 16 pounds of material. Due to scrap and rework, each unit
has been averaging 18 pounds of material. The material costs $6 per pound.If the
company wants to reduce non-value-added costs by 25 percent next year, the currently
attainable standard for material would be
 17.50
21. Alpha, Inc., Manufactures Product A. the Setup time for a product is 8 hours. A firm that
uses JIT and produces the same product has reduced setup time by 1 hours. Setup labor is
$35 per hour. If the company wants to reduce non-value-added costs by 30 percent next
year, the currently attainable standard for setup time would be
 5.9
22.

 900,000
23.

 75,000

24.

 480,000
25.
  85,500
26. Internal reports prepared under the responsibility accounting approach should highlight:
 controllable cost
27. A company has three producing departments and one service department. Due to a
scheduling error in the service department, an unfavorable variance was created. A sound
responsibility accounting system would dictate that the variance be:
 charged to the service department causing the variance and not allocated to
other departments
28. Responsibility reports should possess all of the following characteristics except:
 being stated only in dollars for operating management
29. Controllable costs are:
 costs that are likely to respond to the amount of attention devoted to them by
a specified manager
30. The most desirable measure of departmental performance for evaluating the
departmental manager is departmental:
 revenue less controllable departmental expenses
31. Of most relevance in deciding how or which costs should be assigned to the responsibility
center is the degree of:
 Controllability
32.

 25
33.

 5,800 unfavorable
34. The primary difference between a fixed (static) budget and a variable (flexible) budget is
that a fixed budget:
 is a plan for a single level of sales (or other measure of activity); while a
variable budget consists of several plans, one for each of several levels of sales
(or other measure of activity)
35. Flintstone Company uses flexible budgeting for cost control. Flintstone produced 10,800
units of a product during March, incurring indirect material costs of $13,000. Its static
budget for the year reflected variable indirect material costs of $180,000 at a production
 volume of 144,000 units. A flexible budget for March production would reflect indirect
material costs of:
 13,500
36. In analyzing factory overhead variances, an idle capacity variance is the difference
between the:
 budget allowance for actual units produced for the period and the amount of
applied factory overhead
37. All of the following are reasons why responsibility reports are of limited use to managers
in helping them to control costs, except:
 control data available to managers is too timely to be precise
38. In the traditional view of responsibility accounting where individuals are evaluated rather
than operating systems, all of the following dysfunctional results may occur, except:
 managers tend to focus their attention on long-run targets and ignore the
short-term needs of the company
39. which of the following is true of a balanced scorecard?
 is a strategic-based performance management system that identifies objectives
and measures from a financial perspective, customer perspective, process
perspective, and learning and growth perspective.
40. Lead measures are critical to strategy because
 there should be a causal linkage with strategy.
41. A major difference between activity-based responsibility accounting and strategic-based
responsibility accounting is
 only strategic-based responsibility accounting is linked to strategy
42. Which feature is related solely to strategic-based responsibility and not to activity-based
responsibility?
 customer perspective
43. Which of the following statements is true regarding lag measures?
 lag measures include measures such as customer profitability
44. The outcome measures that are a result of past efforts are called
  Lag measures
45. The outcome measures that can be readily quantified and verified are called:
 Objective measures
46. Which of the following would be a nonfinancial measure?
 dissatisfied customers
47. Which of the following would be a subjective measure?
 employee capabilities
48. Which of the following would be a lag measure?
 sales per employee
49. Which of the following features make stretch targets feasible?
 The measures are linked by causal relationships.
50. Which of the following is NOT a step in developing the Balanced Scorecard?
 outlining control procedures
51. In the financial perspective, economic value added would be an appropriate measure for
 improving asset utilization
52. Diversifying customers and product lines are initiatives important to
 risk management
53. On-time delivery performance is calculated as
 orders delivered on time/total number of orders delivered
54. From the customer perspective, which of the following might be considered a core
objective rather than a performance value?
 increase customer retention
55. The time it takes to produce one unit of product is called
 cycle time.
56. Cycle time is
 the time it takes to produce one unit of product.
57. Delivery performance can be improved by
 decreasing cycle time.
58. A manufacturing cell has the theoretical capability of producing 55,000 microchips per
quarter. The conversion cost per quarter is $30,000. There are 5,000 production hours
available within the cell per quarter. The theoretical velocity per hour is
 11
59. Which of the following might be a measure of employee motivation, empowerment, and
alignment?
 suggestions per employee
60. the beginning of 2018, Vibgyor Company installed a JIT purchasing and manufacturing
system. The following information has been gathered about one of the company's
products:
Theoretical annual capacity 4,200
Actual production 1,600
Production hours available 600
Actual conversion cost per hour $15
The theoretical velocity per hour is
 7
61.

 0.25
62. A manufacturing cell has the theoretical capability of producing 40,000 microchips per
quarter. The conversion cost per quarter is $25,000. There are 4,000 production hours
available within the cell per quarter. The theoretical cycle time per unit in minutes is
 6.000 minutes
63.

 11 per unit
64. Mobility, Inc., manufactures a product that experiences the following activities:
Processing (three departments) 21 hours
Moving (four moves) 6 hours
Waiting time 10 hours
Storage time (before delivery) 19 hours
The MCE for the product is
 0.38
65. The learning and growth perspective has three major objectives. Which of the following is
an objective of the learning and growth process?
 increase motivation and alignment
66. Which of the following would not be an outcome measure?
 training hours
67. Failure of a strategy might be due to
 implementation problems
68. which of the following statements is true of A testable strategy?
 it is a set of linked objectives aimed at an overall goal.
69. The balanced scorecard becomes a means of communicating the strategy of the
organization to its employees and managers. What might be a downside of
communicating this information?
  Sensitive information may end up in the hands of competitors
70. Which of the following is NOT a condition that must be present for a strategy to become
attainable?
 all are conditions that must be met for strategy to become actionable.
71. In a balanced scorecard framework, to ensure that balanced attention is given to all
measures, incentive compensation is paid when:
 Each strategic measure exceeds a prespecified minimum threshold value
72. Which of the following refers to the complete range of tangible and intangible benefits
that a customer receives from a purchased product?
 The total product
73. Which of the following strategies strives to increase customer value by increasing
customer realization?
 A differentiation strategy
74. When a computer company selects a mix of strategies in order to create sustainable
competitive advantage, it is following a
 strategic positioning strategy.
75. The industrial value-chain analysis
 determines a linked set of value-creating activities.
76. The structural and executional factors that determine the long-term cost structure of an
organization are called:
 Organizational cost drivers
77. The operational activity of moving inventory is classified as a
 batch-level activity.
78. Activities required to design, develop, produce, market, distribute, and service a product
are known as
 value-chain activities
79. The last link of the internal value chain is
 Service
80. Analyzing how costs and other financial factors vary as different bundles of activities are
considered to strengthen a firm's strategic position is the process of
 exploiting linkages.
81. Identifying profitable and unprofitable customers is an example of exploiting
 customer linkages.
82. Burgandy Corp.
 750,000
83.

 88,000
84.
  1,628,000
85.

 337.20
86.

 AX
87.

 DZ
88.

 $3,837,670

89.

 Z1
90.

 Y2
91. The period of time when sales increase at a decreasing rate is called the:
 maturity stage
92. The viewpoint that describes the general sales pattern of a product as it passes through
the introduction, growth, maturity, and decline stages is called the:
 Marketing viewpoint
93. Life-cycle cost management consists of
 actions taken to enable a product to be designed, developed, produced,
marketed, distributed, operated, maintained, serviced, and disposed of in
order to maximize profits.
94. Which viewpoint of the product life-cycle is customer-value oriented?
 consumable life-cycle
95. Life-cycle cost management emphasizes
 cost reduction
96.

97.
98.

99. Luminous Company sells a product for $450 per unit. Its market share is 25 percent. The
marketing manager feels that the market share can be increased to 33 percent with a
reduction in price to $390. The product is currently earning a profit of $72 per unit. The
president of Luminous Company feels that the $72 profit per unit must be maintained.
What is the target price per unit?
 $390
100. Dot Company sells a product for $225 per unit. Its market share is 20 percent. The
marketing manager feels that the market share can be increased to 30 percent with a
reduction in price to $195. The product is currently earning a profit of $36 per unit. The
president of Dot Company feels that the $36 profit per unit must be maintained. What is
the target cost per unit?
 $159