Accounting for Strategic Management Exam Practice Tests
Course Introduction
Accounting for Strategic Management explores the integration of accounting information into business planning and strategic decision-making processes. The course examines how financial and managerial accounting tools support the formulation, implementation, and evaluation of organizational strategies. Topics include performance measurement, budgeting, cost analysis, and the use of accounting data to analyze competitive environments, assess risks, and drive long-term value creation. Through case studies and real-world examples, students learn how accounting insights inform resource allocation, strategic investments, and management control systems to achieve organizational objectives.
Recommended Textbook
Cost Management A Strategic Emphasis 6th Edition by Edward Blocher
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Page 2
Chapter 1: Cost Management and Strategy
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Sample Questions
Q1) Which of the following is not a benefit of using a lean manufacturing system?
A)Lead times are reduced.
B)Average inventory is decreased.
C)Productivity is improved.
D)Production operations are linked in a smooth, uninterrupted flow.
E)Products, on average, have less variety.
Answer: E
Q2) Which of the following is not considered part of the Institute of Management Accountants' definition of management accounting?
A)partnering in management decision making.
B)devising planning and performance management systems.
C)analyzing data and providing information.
D)providing expertise in financial reporting and control.
E)assisting management in the formulation and implementation of an organization's strategy.
Answer: C
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3
Chapter
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Sample Questions
Q1) Which of the following statements concerning value chain analysis is false?
A)The goal of value chain analysis is to find areas where a company can either add value or reduce cost.
B)The value chain focuses on the entire production process, as well as the sale of the product and service after the sale.
C)If a company cannot compete in a specific area of the value chain, it might consider the option of outsourcing that portion of the value chain to someone who can perform it better.
D)Throughout most industries, the most successful firms are the ones that operate within the entire value chain, thereby overseeing every aspect of the value chain for the customer.
Answer: D
Q2) In SWOT analysis, opportunities and threats are identified by:
A)Consultation with middle management.
B)Talking with the rank and file workers.
C)Looking outside the firm.
D)Brainstorming techniques.
E)Reviewing our corporate strategy.
Answer: C
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Chapter 3: Basic Cost Management Concepts
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Sample Questions
Q1) Factory overhead costs for a given period were 3 times as much as the direct material costs. Prime costs totaled $2,000. Conversion costs totaled $3,280. What are the direct labor costs for the period?
A)$1,220.
B)$1,360.
C)$1,410.
D)$1,540.
Answer: B
Q2) What should be the amount of direct materials used?
A)$15,000.
B)$29,000.
C)$20,000.
D)$24,000.
Answer: D
Q3) What should be the amount of direct materials used?
A)$112,000.
B)$183,000.
C)$189,000.
D)$204,000. Answer: B
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Chapter 4: Job Costing
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Sample Questions
Q1) The total cost of Job X is:
A)$152,400.
B)$128,200.
C)$151,900.
D)$129,600.
E)$140,800.
Q2) The predetermined factory overhead rate includes:
A)Estimated annual sales.
B)Estimated total amount of cost driver.
C)Estimated total cost.
D)Estimated electricity consumed.
Q3) Assuming Jackson Inc. applied overhead based on machine hours, the firm's predetermined overhead rate for 2013 is:
A)$28.42 per machine hour.
B)$32.25 per machine hour.
C)$31.00 per machine hour.
D)$33.50 per machine hour.
E)$37.41 per machine hour.
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6
Chapter 5: Activity-Based Costing and Customer
Profitability Analysis
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Sample Questions
Q1) Using activity-based costing, applied machine repetition overhead for the 1,000 laser printers order is:
A)$7,800.
B)$10,000.
C)$10,500.
D)$150.
E)$21,600.
Q2) What is the total manufacturing overhead for the current product order if the firm uses a plantwide rate based on direct labor-hours?
A)$9,960.
B)$30,240.
C)$43,741.
D)$44,268.
E)$109,352.
Q3) Volume-based overhead rates may cause undesirable strategic effects such as:
A)Incorrect decisions.
B)Unprofitable cross-subsidization of products.
C)Ineffective management of operations for process improvement.
D)Answers A, B and C are all correct.
E)None of the answers above is correct.
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Chapter 6: Process Costing
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Sample Questions
Q1) Backflush costing:
A)Is a simplified approach to determining product cost that is used when there is little or no work-in-process inventory.
B)Involves the use of standard costing.
C)Allows product costs to be quickly and conveniently calculated
D)Is an approach to determining product cost that is used when JIT is used.
E)ALL of the above.
Q2) Which of the following companies (industries) would not use a process cost system?
A)Georgia-Pacific Corporation (Lumber & Paper).
B)Durham Integrative Medical Care (Medical practice).
C)Bayer Pharmaceuticals (Drugs).
D)Reichhold Chemical Co. (Chemicals).
E)Accenture (Consulting).
Q3) Firms should use a process costing system when they produce products that:
A)Are semi-homogeneous.
B)Pass through a series of inspection points.
C)Pass through a series of manufacturing departments.
D)Have a small batch size.
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Chapter 7: Cost Allocation: Departments, Joint Products, and By-Products
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Sample Questions
Q1) The total cost accumulated in the assembly department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):
A)$104,500.
B)$109,950.
C)$124,050.
D)$130,750.
E)$136,500.
Q2) The total cost accumulated in the finishing department using the reciprocal method is(calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):
A)$1,890,000.
B)$627,143.
C)$682,551
D)$1,062,857.
E)$1,007,449.
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9
Chapter 8: Cost Estimation
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Sample Questions
Q1) Austen Co. produced a pilot run of eighty units of a recently developed part used in the finished products. Austen Co. expects to produce and sell 2,560 units annually. The pilot run required 40 direct labor hours for the eighty units, averaging 0.5 direct labor hours per unit. Austen experiences an eighty percent learning curve.
Required:
Calculate the average direct labor hours per unit for the first 2,560 units (including the pilot run) produced.
Q2) Which of the following is not a step in the cost estimation process?
A)Determine the cost drivers.
B)Determine the outliers.
C)Select and employ the estimation method.
D)Graph the data.
Q3) The objective of the fourth step in cost estimation, graphing the data, is intended to:
A)Identify unusual patterns.
B)Show data in two dimensions.
C)Enhance the cost estimation process.
D)Allow for subjectivity in cost estimation.
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Chapter
Cvp Analysis
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Sample Questions
Q1) The degree of operating leverage (DOL), at any sales volume, is equal to:
A)(Operating profit - fixed expenses) ÷ sales.
B)(Sales - variable expenses) ÷ operating profit.
C)Operating profit ÷ (fixed expenses - variable expenses).
D)Sales ÷ (fixed expenses - operating profit).
E)Fixed costs ÷ Total contribution margin.
Q2) CVP analysis with multiple products assumes that sales will continue at the same mix of products, expressed in either sales units or sales dollars. This assumption is essential, because a change in the product mix will probably change:
A)The average sales price per unit.
B)The average variable cost per unit.
C)The weighted-average contribution margin (per unit or ratio).
D)The total fixed cost.
E)The average contribution margin (per unit or ratio).
Q3) Staley Co.'s operating income is calculated to be:
A)$19,800.
B)$21,800.
C)$24,800.
D)$23,800.
E)$20,800.
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Chapter 10: Strategy and the Master Budget
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Sample Questions
Q1) "Budgetary slack" occurs when:
A)Employees refuse to adhere to budgeted plans and operations.
B)The budget is so difficult to meet that employees slack-off from work.
C)An authoritative, or imposed, budgeting process is used.
D)In order to "meet" budget objectives, employees ask for resources in excess of what they need.
E)Employees ask for fewer resources than they need, in order to continuously improve.
Q2) Compare and contrast traditional budgeting and activity-based budgeting (ABB) along the following dimensions: budgeting unit; primary focus; time orientation; roles of suppliers and customers; and, control objective.
Q3) Allmakes Software budgeted August purchases of new software at $140,000.The store had software costing $6,000 on hand at the beginning of August, and to cover part of anticipated back-to-school sales in September they expect to have $15,000 of software on hand at the end of August.
Required: What was the budgeted cost of goods sold for August?
Q4) What is zero-base budgeting (ZBB) and how does this approach to budgeting compare to what can be considered "traditional budgeting"? How is ZBB implemented in practice?
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Page 12
Chapter 11: Decision Making With a Strategic Emphasis
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Sample Questions
Q1) The cost(s) NOT relevant for this asset-replacement decision is/are:
A)The acquisition cost of the used fork lift.
B)The acquisition cost of the existing fork lift.
C)The repairs cost for the existing fork lift.
D)The annual operating costs for the existing fork lift.
E)The annual operating costs for the used fork lift.
Q2) Fixed costs will often be irrelevant for decision making because they:
A)Do not vary on a per-unit-of-output basis.
B)Are the same each time period.
C)Typically do not differ between and among decision alternatives.
D)Are not committed.
E)Cannot be estimated with precision.
Q3) All the following are characteristic of relevant costs except:
A)They are generally variable.
B)They are not committed.
C)They are different in amount for different options.
D)They are costs that will be incurred in the future.
E)They are inventory-related costs.
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Chapter 12: Strategy and the Analysis of Capital Investments
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Sample Questions
Q1) The book (accounting) rate of return based on initial investment for this proposed investment is:
A)12.73%.
B)14.00%.
C)24.00%.
D)28.00%.
Q2) Which of the following would not be considered a benefit of conducting post-implementation audits of capital investment projects?
A)Such audits ensure the realization of future after-tax cash flows.
B)Such audits facilitate learning from estimation errors.
C)Knowledge that investments are subject to post-implementation audit can counter tendencies to inflate estimates of net cash benefits associated with proposed investment projects.
D)The use of such audits allows top management to identify and reward good project planners.
E)Such audits reduce the tendency of managers to overstate benefits or understate costs associated with proposed capital investments.
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Chapter 13: Cost Planning for the Product Life Cycle: Target
Costing, Theory of Constraints, and Strategic Pricing
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Sample Questions
Q1) Which of the following is a common type of value engineering in which the performance and cost of each major function or feature of the product is examined?
A)Cost analysis.
B)Variable design engineering.
C)Cost-based value engineering.
D)Functional analysis.
E)Design analysis.
Q2) The theory of constraints (TOC) approach is strategically important in dynamic markets because it leads to:
A)A more responsive and flexible manufacturing environment.
B)Better customer relationships.
C)Quicker data accessibility.
D)Faster setup times.
Q3) The product cost for model B-13 is:
A)$1,457.82.
B)$1,293.32.
C)$1,159.34.
D)$905.31.
E)$980.91.
15
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Chapter 14: Operational Performance Measurement:
Direct-Cost Variances, and the Role of Nonfinancial
Performance Measures
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Sample Questions
Q1) An organization planned to use $82 of direct material per unit of output, but it actually used $80 per unit. During this period, the company planned to make 1,200 units, but actually produced only 1,000 units. The flexible budget amount for direct materials cost is:
A)$80,000.
B)$82,000.
C)$96,000.
D)$98,400.
Q2) The way managers and employees who are affected by a standard cost system perceive the system will:
A)Be of little consequence on the success of the system if correctly implemented.
B)Generally be minimal in impact on the implementation of the system.
C)Affect its success or failure in implementing the system.
D)Be difficult to assess.
E)Not matter in the long run.
Q3) What four variances may be included as a component of the total variable cost flexible-budget variance for a given period?
Q4) What is a direct materials usage ratio? For what purpose is this ratio used?
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Chapter 15: Operational Performance Measurement:
Indirect-Cost Variances and Resource-Capacity Management
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Sample Questions
Q1) Under a three-variance breakdown (decomposition) of the total factory overhead variance, the factory overhead efficiency variance is:
A)$400 favorable.
B)$600 unfavorable.
C)$1,400 favorable.
D)$1,400 unfavorable.
E)$2,000 favorable.
Q2) The difference between actual overhead costs incurred during the period and the overhead in the flexible budget based on the output for the period is called the:
A)Total overhead spending variance.
B)Total overhead efficiency variance.
C)Production-volume variance.
D)Overhead flexible-budget variance.
E)Total overhead variance.
Q3) What are the steps in establishing the standard application rate for variable factory overhead cost? Does the procedure differ for product-costing versus cost control purposes?
17
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Chapter 16: Operational Performance Measurement:
Further Analysis of Productivity and Sales
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Sample Questions
Q1) One major problem in measuring the productivity of a not-for-profit organization is the absence of:
A)Overhead costs.
B)A common measure for its outputs.
C)Mandatory financial reporting.
D)Materials costs.
Q2) Sales volume variances can have significant implications for strategic management. An unfavorable sales volume variance may indicate that:
A)The industry is in decline.
B)The company needs a new competitive strategy.
C)Product mix changes are favorable but quantity variances are unfavorable.
D)Labor productivity needs to be addressed
Q3) In 2013, the partial direct labor operational productivity is:
A)0.20.
B)0.25.
C)0.40.
D)4.00.
E)5.00.
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Chapter 17: The Management and Control of Quality
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Sample Questions
Q1) ISO certification is a key component of a firm's efforts to improve quality and compete successfully.
Required: What must an organization demonstrate, in terms of its operating processes, in order to become ISO-9000 certified?
Q2) An electronic component has an output voltage specification of 138 ± 5 millivolts. The loss to the firm for a component that is outside of the specifications is $220. The output voltage for a sample unit is 134 millivolts.
Required:
1. Calculate the value of k, the cost coefficient in the Taguchi Quality Loss Function for the above situation.
2. Calculate the amount of estimated loss for the sample unit, L(x) (where x = 134 millivolts).
3. Recalculate the amount of the estimated loss if the output voltage, x, for the sample unit is 136 millivolts.
4. Recalculate the amount of the estimated loss of the output voltage, x, for the sample unit is 138 millivolts.
5. What is the primary insight revealed by the Taguchi Quality Loss Function?
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Chapter 18: Strategic Performance Measurement: Cost
Centers, Profit Centers, and the Balanced Scorecard
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Sample Questions
Q1) Operational control has a management-by-exception approach in contrast to management control, which is more consistent with:
A)The management-by-incentives approach.
B)The management-by-objectives approach.
C)The "hands off" approach.
D)A non-quantitative set of measures.
E)A non-qualitative set of measures.
Q2) In properly developing formal systems at the team level that will have the desired impact on employees' performance, the management accountant should recognize any existing informal systems and:
A)Make plans to eliminate these informal systems.
B)Simply formalize them into the system being developed.
C)Try to eliminate them prior to system development.
D)Not let these "culture" aspects affect system development.
E)Try to capture valued "culture" aspects in the formal system.
Q3) The value stream income statement can be compared to:
A)Value chain analysis.
B)The contribution income statement.
C)A streamlined production process.
D)A streamlined accounting system.
Page 20
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Chapter 19: Strategic Performance Measurement:
Investment Centers and Transfer Pricing
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Sample Questions
Q1) Given a competitive outside market for identical intermediate goods, what is the best transfer price, assuming all relevant information is readily available?
A)Average cost of production.
B)Average cost of production, plus average production department allocated profit.
C)Market price of the intermediate goods.
D)Market price of the intermediate goods, less average production department allocated profit.
E)Full cost, plus a mark-up for profit.
Q2) Residual income (RI) may be a better measure for financial performance evaluation of an investment center than return on investment (ROI) because:
A)Problems associated with measuring the investment base are eliminated.
B)Desirable investment opportunities will not be neglected by high-return divisions.
C)Only the gross book value of assets needs to be calculated.
D)Returns do not increase as assets are depreciated.
E)The arguments over the implicit cost of interest are largely eliminated.
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Chapter 20: Management Compensation, Business
Analysis,
and Business Valuation
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Sample Questions
Q1) As a firm's strategy changes to respond to different stages of a product's life cycle, compensation:
A)Can be affected.
B)Is affected, but only to a very limited extent.
C)Should change in response to the new strategy.
D)Should increase.
E)Should decrease.
Q2) Performance shares grant stock for achieving certain performance goals:
A)In the following year.
B)In two years or more.
C)In the current period.
D)When stock prices improve.
Q3) The gross margin percentage for 2013 is (rounded):
A)11.2%
B)12.7%
C)13.7%
D)14.9%
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Page 22