Cost Management - A Strategic Emphasis Answer Key Part 3

43) Of the following, which aspect of a contemporary management technique is a framework and process that organizations use to manage the occurrence of possible events that could negatively or positively affect the company's competitiveness and success? A) Total quality management B) Lean accounting C) The theory of constraints D) Enterprise sustainability E) Enterprise risk management Answer: E 44) Which of the following formulas best reflects target costing? A) Target cost = Firm-determined price less desired profit. B) Target cost = Market-determined price less desired profit. C) Target cost = Firm-determined price less desired revenue. D) Target cost = Market-determined price less desired revenue. E) Target cost = Firm-determined price less market-determined price. Answer: B 45) A large company has recently been experiencing larger than normal inventory levels. Management would like to implement a theory of constraints system to help control the company's inventories. Which of the following is not a benefit associated with the theory of constraints? A) Speed of product development. B) Existing problems such as bottlenecks are highlighted. C) Reduced cycle time. D) Prompt delivery. E) Better product design. Answer: E 46) The Dodd-Frank Act (2010) includes a variety of new regulations, including the creation of: A) The Cost Accounting Standards Board. B) The Consumer Financial Protection Bureau. C) The Financial Services Industry Control Commission. D) The Wall Street Reform and Protection Board. E) The Executive Compensation Review Board. Answer: B 47) Which of the following contemporary management techniques requires a balancing of multiple environmental and social goals? A) Target costing. B) The theory of constraints. C) Benchmarking. D) Business process improvement. E) Enterprise sustainability. Answer: E 48) The competitive strategy in which the firm succeeds by producing at the lowest cost in the industry is termed: A) Differentiation. B) Cost advantage. C) Price strategy. D) Cost leadership. E) Resource-based strategy. Answer: D 49) The competitive strategy in which the firm succeeds by developing and maintaining a unique value for the product, as perceived by the customer, is termed: A) Differentiation. B) Specialization advantage. C) Design strategy. D) Benchmarking. E) Product specialization. Answer: A 50) The following problems have occurred at your company: management seems to be making decisions based on guesses and intuition, there's a lack of clarity concerning direction and goals, and profitable opportunities are being missed. What is your company suffering from? A) A lack of strategic information; management has not determined its strategic competitive position. B) Managers have too much information. C) The company is not familiar with business reengineering and value chain analysis. D) The company has an inappropriate mission statement. Answer: A 51) Due in part to increased global competitiveness and changes in management techniques and processes, what has changed about the role of the management accountant? A) Management accountants have started to place a greater emphasis on financial information, in order to promote continued growth in earnings. B) Rather than to focus on problems within functions (such as a marketing problem or a production problem), management accountants are using a strategic approach to address problems in a cross-functional manner. C) Management accountants have developed a variety of new techniques to measure functional area performance. D) There has been a renewed emphasis on short-term profitability, since product life cycles have started getting shorter. Answer: B 52) In the current business environment, companies cannot survive without a strategy. What exactly should an effective strategy include? A) A set of plans for using resources to achieve sustainable goals. B) A focus on accurate financial data, thus allowing the firm to effectively compete in any environment. C) A focus on long-term nonfinancial information that will provide the company with versatile management techniques capable of being used in a wide variety of situations. D) A clear, concise mission statement, naming every product and outlining the company's longterm goals of success. Answer: A 53) Which of the following is considered to be an advantage of using both nonfinancial and financial information in the balanced scorecard? A) Nonfinancial information is most helpful in analyzing a company's past performance, while financial information is most useful in evaluating potential future performance. B) Nonfinancial information provides the short-term perspective while financial information provides the long-term perspective of performance. C) Nonfinancial information can reflect the company's current and potential competitive advantage, while financial information tends to focus on a firm's achieved financial performance. D) Nonfinancial information should be included with financial information because it is more reliable than financial information. Answer: C 54) If a company is working on strategic positioning, what best describes what the company is considering? A) How the firm is perceived by its external environment, its competitors, and customers. B) Where the firm's physical plants, buildings, and warehouses will be located. C) The firm's position on important issues, such as the environment and government regulations. D) Which competitive strategy the firm will use to achieve a sustainable competitive advantage. Answer: D 55) A firm that has traditionally succeeded on the basis of its innovative products and excellent customer service has started to place greater emphasis on reducing waste and providing its customers with the lowest priced product. Which of the following most accurately describes this change of competitive strategy? A) Cost leadership to differentiation. B) A balanced strategy to cost leadership. C) Differentiation to a balanced strategy. D) Cost leadership to a balanced strategy. E) Differentiation to cost leadership. Answer: E 56) Which of following statements is/are true concerning strategy? A) Once a firm has chosen a strategy, it is unwise to change it, even though the company or business environment might change. B) If a company does decide to compete on more than one strategy, it must carefully execute both strategies to be successful. C) Since the business environment is always changing, rather than stick constantly with one strategy, firms should pay close attention during times of change, and adjust their strategies accordingly. D) A company following both cost leadership and differentiation strategies is likely to succeed only if it achieves one of the strategies very well. Answer: D 57) A strategy can be best defined as: A) an effective use of the organization's resources. B) a plan for using a firm's resources to achieve sustainable goals within a competitive environment. C) a clear and detailed statement of an organization's mission and vision. D) a plan developing a firm's mission and vision statements. Answer: B 58) Which of the following is a contemporary management technique used by the management accountant to identify and monitor the costs of a product throughout all steps from product design to the finished product? A) Enterprise risk management. B) Target costing. C) Life cycle costing. D) Enterprise sustainability. Answer: C 59) Which of the following is not among the management accounting profession's response to changes in the contemporary business environment? A) Introduction of the balanced scorecard. B) Value chain analysis. C) Advances in costing, including activity-based costing. D) The introduction of business process improvement. E) New forms of management organization. Answer: E 60) Important changes in the contemporary business environment include all of the following except: A) Management organizations. B) Climate change. C) Information technology. D) Customer expectations. E) Global competition. Answer: B 61) Which of the following is not a consequence of lack of strategic information? A) Inability to effectively benchmark competitors. B) Failure to identify most profitable products. C) Inability to trace costs to individual products. D) Incorrect investment decisions. Answer: C 62) Which of the following is not a way for a management accountant to resolve an ethical conflict? A) Bring the matter to the attention of the company's auditor. B) Consult an attorney concerning the ethical conflict. C) Initiate a confidential discussion on the IMA Ethics helpline. D) Discuss the issue with the management accountant's immediate supervisor except when the supervisor is involved. Answer: A 63) Which of the following organizations supports the growth and professionalism of management accounting practice? A) CPAAM B) CFA C) CMAB D) FASB E) IMA Answer: E