Strategic Cost Management Study Guide
Questions
Course Introduction
Strategic Cost Management explores the integration of cost accounting with strategic decision-making processes within organizations. The course covers techniques for identifying, measuring, and managing costs to support long-term organizational goals, enhance competitiveness, and maximize value creation. Emphasis is placed on the use of cost information in planning, budgeting, performance evaluation, and strategic analysis, including tools like activity-based costing, value chain analysis, and target costing. Through real-world case studies and practical applications, students learn how effective cost management supports strategic initiatives and drives business success in dynamic environments.
Recommended Textbook
Cost Accounting A Managerial Emphasis 7th Canadian Edition by Charles T. Horngren
Available Study Resources on Quizplus
22 Chapters
3533 Verified Questions
3533 Flashcards
Source URL: https://quizplus.com/study-set/3577 Page 2
Chapter 1: The Accountants Vital Role in Decision Making
Available Study Resources on Quizplus for this Chatper
141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/71051
Sample Questions
Q1) What areas of responsibility does a chief financial officer have in a typical organization?
Answer: The responsibilities vary among organizations,but generally include the following areas: controllership,treasury,risk management,taxation,investor relations,and internal audit.
Q2) Corporate social responsibility (CSR)is the legislated integration of social and environmental concerns into business decisions.
A)True
B)False Answer: False
Q3) ________ includes reporting and interpreting information that helps managers to focus on operating problems,imperfections,inefficiencies,and opportunities.
A)Scorekeeping
B)Control
C)Problem-solving
D)Planning
E)Budgeting
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: An Introduction to Cost Terms and Purposes
Available Study Resources on Quizplus for this Chatper
171 Verified Questions
171 Flashcards
Source URL: https://quizplus.com/quiz/71050
Sample Questions
Q1) Finished goods inventory would normally include
A)direct materials in stock and awaiting use in the manufacturing process.
B)goods partially worked on but not yet fully completed.
C)goods fully completed but not yet sold.
D)products in their original form intended to be sold without changing their basic form.
E)goods completed and sold.
Answer: C
Q2) Calculate this year's operating income if the company plans to produce and sell 60,000 units.
A)$120,000
B)$0
C)$<30,000>
D)$<100,000>
E)$<450,000>
Answer: E
Q3) Nearly all accounting systems accumulate forecasted costs.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Cost-Volume-Profit Analysis
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/71049
Sample Questions
Q1) How many units will he need to sell in order to break-even assuming Brian incurred
$10,000 in expenses to advertise the sale,and there are no other expenses?
A)20 packages
B)25 packages
C)75 packages
D)100 packages
E)125 packages
Answer: D
Q2) In cost-volume-profit analysis (CVP)it is assumed that both the product mix and the volume sold are dynamic variables.
A)True
B)False
Answer: False
Q3) Sensitivity analysis is a "what-if" technique that managers use to examine how a result will change if the originally predicted data are not achieved or if an underlying assumption changes.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Job Costing
Available Study Resources on Quizplus for this Chatper
145 Verified Questions
145 Flashcards
Source URL: https://quizplus.com/quiz/71048
Sample Questions
Q1) What would be the percentage change in the budgeted direct cost rate if they consider hiring one more employee,as part of the office staff?
A)3.0%
B)2.0%
C)1.0%
D)0.5%
E)0%
Q2) What is the actual indirect cost rate at Big Sky Ltd.using machine hours as the allocation base?
A)$60.67
B)$10.67
C)$7.89
D)$4.05
E)$3.84
Q3) Raw materials that can be traced to a cost object are an example of an indirect cost.
A)True
B)False
Q4) Explain how a budgeted indirect cost allocation rate is determined.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Activity-Based Costing and Management
Available Study Resources on Quizplus for this Chatper
144 Verified Questions
144 Flashcards
Source URL: https://quizplus.com/quiz/71047
Sample Questions
Q1) How are cost drivers selected in activity-based costing systems?
Q2) Direct cost tracing will accomplish which of the following?
A)identify homogeneous costs
B)classify more costs as indirect
C)focus on the cause-and-effect criterion when choosing allocation bases
D)expand the number of indirect cost pools
E)classify as many of the costs as direct costs,as is economically feasible
Q3) A cost hierarchy is a categorization of costs into different cost pools on the basis of different classes of cost drivers or different degrees of difficulty in determining cause-and-effect relationships.
A)True
B)False
Q4) In an activity-cost pool
A)a measure of the activity performed serves as the cost allocation base.
B)the costs have a cause-and-effect relationship with the cost-allocation base for that activity.
C)the cost pools are homogeneous over time.
D)costs in a cost pool can always be traced directly to products.
E)each pool pertains to a narrow and focused set of costs.
Q5) List four ways that activity-based management can be effective.
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Master Budget and Responsibility Accounting
Available Study Resources on Quizplus for this Chatper
170 Verified Questions
170 Flashcards
Source URL: https://quizplus.com/quiz/71046
Sample Questions
Q1) What will be Country Heather's budgeted revenue?
A)$216,000
B)$240,000
C)$312,000
D)$318,000
E)$300,500
Q2) The master budget reports a large amount of nonfinancial data from various value chain functions.
A)True
B)False
Q3) What will be Country Heather's cost of goods sold?
A)$122,400
B)$136,000
C)$139,400
D)$149,600
E)$101,500
Q4) Responsibility accounting focuses on information and knowledge,not control. A)True B)False
Page 8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Flexible Budgets,variances,and Management
Control: I
Available Study Resources on Quizplus for this Chatper
172 Verified Questions
172 Flashcards
Source URL: https://quizplus.com/quiz/71045
Sample Questions
Q1) What is the actual operating income for Ames Golf Company using the actual results?
A)<$3,360,000>
B)$4,750,000
C)$5,200,000
D)$5,550,000
E)$5,970,000
Q2) Depending on the level of the cost hierarchy of an activity,cutting a volume of input to the benefit of one business function may increase costs throughout the entire value chain.
A)True
B)False
Q3) For the dry ingredients what are the material mix and yield variances respectively?
A)$270 favourable/$270 unfavourable
B)$360 unfavourable/$360 unfavourable
C)$360 favourable/$360 unfavourable
D)$360 favourable/$360 favourable
E)$270 unfavourable/$270 unfavourable
Q4) What is benchmarking,and how is it useful to a company?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Flexible Budgets,variances,and Management
Control: II
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/71044
Sample Questions
Q1) Calculate the efficiency variance for variable setup overhead costs.
A)$150 favourable
B)$114 favourable
C)$264 unfavourable
D)$264 favourable
E)$250 favourable
Q2) What is the fixed overhead rate variance?
A)$1,000 unfavourable
B)$2,000 favourable
C)$3,000 unfavourable
D)$5,000 favourable
E)$983 unfavourable
Q3) What is the Michelle Inc.variable production-volume variance?
A)$13,500 unfavourable
B)$6,000 unfavourable
C)$6,000 favourable
D)$0
E)There is never a variable production-volume variance.
Q4) Explain why sales-volume variance could be helpful to managers.
Q5) How is a budgeted fixed overhead cost rate calculated?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Income Effects of Denominator Level on Inventory Valuation
Available Study Resources on Quizplus for this Chatper
171 Verified Questions
171 Flashcards
Source URL: https://quizplus.com/quiz/71043
Sample Questions
Q1) Which of the following is TRUE concerning operating income calculated under variable costing as compared to absorption costing?
A)Operating income is lower under variable costing when production exceeds sales.
B)Operating income is higher under variable costing when production exceeds sales.
C)Operating income is lower under variable costing when sales exceeds production only if there is a production-volume variance.
D)operating income is higher under variable costing when production exceeds sales only if there is a production-volume variance.
E)The relationship between production and sales has no bearing on the differences in operating income between the two methods.
Q2) Under variable costing,which of the following expenses is inventoriable?
A)variable manufacturing overhead
B)direct manufacturing labour and fixed manufacturing overhead
C)marketing and direct manufacturing labour
D)variable manufacturing overhead and administrative
E)variable and fixed manufacturing overhead
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Analysis of Cost Behaviour
Available Study Resources on Quizplus for this Chatper
212 Verified Questions
212 Flashcards
Source URL: https://quizplus.com/quiz/71042
Sample Questions
Q1) Correctly identifying the cost driver and separating fixed from variable costs are important inputs for many management decisions.
A)True
B)False
Q2) Using the high-low method determine the slope coefficient per labour hour at Bradco Restoration?
A)$5.25
B)$4.00
C)$2.00
D)$0.50
E)$0.25
Q3) When new products are introduced,learning-curve effects can have a major influence on production scheduling.
A)True
B)False
Q4) Define cost of quality (COQ),list the four categories,and provide an example of each.
Q5) Describe the two assumptions upon which managers often estimate cost functions.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Decision Making and Relevant Information
Available Study Resources on Quizplus for this Chatper
174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/71041
Sample Questions
Q1) Ignoring tax consequences,how should the gain or loss on disposal of an old machine be treated in an equipment replacement decision?
A)used to defray installation costs of the new machine
B)deducted from the accumulated amortization
C)deducted from the cost of the new machine
D)added to the accumulated amortization (or deducted from the cost)of the old machine
E)It is irrelevant.
Q2) The feedback obtained in the decision process cannot affect
A)future predictions.
B)the prediction method.
C)the decision model.
D)implementation.
E)past performance.
Q3) Past costs that are unavoidable and unchangeable are known as
A)fixed overhead costs.
B)operating costs.
C)product production costs.
D)sunk costs.
E)constraining costs.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Pricing Decisions, product Profitability
Decisions, and Cost Management
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/71040
Sample Questions
Q1) A company uses a long-run time horizon to price its product,an electronic component used in aircraft.To produce a normal production run for a year of 100,000 units direct materials are $90,000;direct labour is $180,000;and,rent on leased equipment is $106,000 per year.Currently re-work is running at 4% of production,after testing.The company has the capacity to test 10 units per hour.Manufacturing Overhead has two cost drivers: testing (cost driver is testing hours at $2.50 per hour);and,rework (cost driver is units reworked at $80 per unit re-worked).
Calculate current total manufacturing costs for 100,000 units.
A)$320,000
B)$376,000
C)$396,000
D)$401,000
E)$721,000
Q2) Peak-load pricing focuses on direct costs when setting prices for peak and nonpeak periods.
A)True
B)False
Q3) Explain the differences between short-run pricing decisions and long-run pricing decisions.
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Strategy,balanced Scorecard,and Profitability Analysis
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/71039
Sample Questions
Q1) Engineered costs differ from discretionary costs by the two key dimensions of: 1)type of process;and,2)the level of uncertainty.
A)True
B)False
Q2) Downsizing is an integrated approach to configure processes,products,and people to by match costs to the activities that need to be performed,to operate efficiently and effectively,now and in the future.
A)True
B)False
Q3) Downsizing is also called rightsizing.
A)True
B)False
Q4) Total factor productivity (TFP)is easy to compute for a single-product company.When dealing with a multiproduct company,one of two adjustments must be made.What are these potential adjustments?
Q5) Required:
a.What is the operating income for Year 1?
b.What is the operating income in Year 2?
c.What is the change in operating income from Year 1 to Year 2?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Period Cost Allocation
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/71038
Sample Questions
Q1) If a dual-rate cost allocation method is used,what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume budgeted usage is used to allocate fixed materials laboratory costs and actual usage is used to allocate variable materials laboratory costs.
A)$782,500
B)$817,500
C)$822,500
D)$705,000
E)$996,923
Q2) The costs of designing and implementing sophisticated cost allocation systems are usually not very visible.
A)True
B)False
Q3) The stand-alone method of allocating common costs emphasizes fairness and equity among users.
A)True
B)False
Q4) Should a company allocate its corporate costs to divisions?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Cost Allocation: Joint Products and Byproducts
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/71037
Sample Questions
Q1) All of the following changes may indicate a change in product classification of a manufacturing process which has a splitoff point EXCEPT
A)scrap items increase in sales value.
B)a main product becomes a joint product.
C)a main product becomes technologically obsolete.
D)a byproduct loses its market due to a new invention.
E)a byproduct increases in market value.
Q2) How much is the ending inventory for the byproduct if byproducts are recognized in the general ledger when production is completed?
A)$0
B)$1,500
C)$14,375
D)$16,000
E)$17,500
Q3) The method of allocating joint product costs is an important guide for other management decisions.
A)True
B)False
Q4) What are a joint cost and a splitoff point?
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Revenue and Customer Profitability Analysis
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/71036
Sample Questions
Q1) Unfavourable variances reveal not only what occurred but how it occurred.
A)True
B)False
Q2) Allocated corporate costs are irrelevant when analyzing whether to drop a customer.
A)True
B)False
Q3) Using the incremental method,what amount of revenue will be allocated to Math Fun in the package that contains all three products?
A)$48.25
B)$60.00
C)$45.60
D)$50.67
E)$90.00
Q4) Under the stand-alone method,which weights better capture the benefits received by customers who purchase a bundled product?
Q5) Describe and discuss the two methods of allocating the revenues of a bundled package to the individual products in that package.Describe any special problems associated with the method.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Process Costing
Available Study Resources on Quizplus for this Chatper
147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/71035
Sample Questions
Q1) What is the conversion cost per equivalent unit in Department A?
A)$5,400
B)$3,425
C)$3,571
D)$3,699
E)3,857
Q2) How many of the Rest-a-Lot company units that were started during February were completed during February?
A)85,000
B)80,000
C)75,000
D)65,000
E)70,000
Q3) Ford Motor Company is said to use a hybrid costing system.What is a hybrid costing system,and what would be the advantage to Ford of such a system?
Q4) What is meant by the term "prime cost pool"?
Q5) List and describe the five steps in process costing.
Q6) Discuss some typical products which would likely use process costing.
Q7) Compare and contrast process costing and job order costing.
Page 19
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: Spoilage, rework, and Scrap
Available Study Resources on Quizplus for this Chatper
137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/71034
Sample Questions
Q1) Abnormal spoilage totalled
A)1,600 units.
B)2,000 units.
C)1,680 units.
D)1,920 units.
E)1,700 units.
Q2) What costs are allocated to the ending work-in-process inventory for direct materials and conversion costs,respectively?
A)$28,250;$24,850
B)$30,000;$23,100
C)$30,000;$21,590
D)$39,500;$13,600
E)$40,000;$23,100
Q3) The unit costs of abnormal and normal spoilage are equal,when the two are detected simultaneously.
A)True
B)False
Q4) IFRS/ASPE permits normal spoilage costs to be part of cost of goods sold.
A)True
B)False
20
To view all questions and flashcards with answers, click on the resource link above.
Chapter 19: Inventory Cost Management Strategies
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/71033
Sample Questions
Q1) The executive vice president of Robotics,Inc. ,is concerned because the cost of materials has not been in line with the budget for several periods,even after implementing an EOQ model.The company has the normal direct material variance computations of price and efficiency at the end of each month.The price variance of the direct materials used is usually near expectations.The vice president does not understand how the budget differences are always larger than the material price variances.
Required: What explanation can you give for the evaluation problems presented?
Q2) Shrinkage costs result from water damage to clothing and other soft goods.
A)True
B)False
Q3) Criticism of backflush accounting included all of the following EXCEPT
A)WIP exists but is not recorded.
B)GAAP is not followed for external reporting purposes.
C)there is an absence of audit trails.
D)the accounting system cannot pinpoint the uses of resources.
E)managers can keep track of operations by personal observation.
Q4) What is a supply chain,and what are the benefits of a supply chain analysis? Provide an example of these benefits.
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Capital Budgeting: Methods of Investment Analysis
Available Study Resources on Quizplus for this Chatper
187 Verified Questions
187 Flashcards
Source URL: https://quizplus.com/quiz/71032
Sample Questions
Q1) Jefferson Ltd.is considering the acquisition of new production equipment.If purchased,the new equipment would cost $1,850,000.Installation and testing costs would be $35,000 and $25,000 respectively.Once operational,the equipment will cause an increase in working capital of $120,000.The new equipment is expected to generate increased annual sales of $720,000.Variable costs to operate the machine are estimated at 42% of sales and annual fixed costs would be lowered by $75,000.The equipment has an estimate 6 year life and a salvage value of $90,000.The company requires an 11% return on its investments.Ignore income taxes.
Required:
a.Compute the net present value.
b.Compute the internal rate of return.
c.Determine the payback period of the investment.
Q2) In the net present value (NPV)method,after-tax cash flows should be used instead of pre-tax cash flows when taxes are a consideration.
A)True
B)False
Q3) Projects with shorter paybacks always generate more cash flows.
A)True
B)False
Page 22
To view all questions and flashcards with answers, click on the resource link above.
Chapter 21: Transfer Pricing and Multinational Management
Control Systems
Available Study Resources on Quizplus for this Chatper
157 Verified Questions
157 Flashcards
Source URL: https://quizplus.com/quiz/71031
Sample Questions
Q1) Market-based transfer prices are generally accepted by tax authorities because they represent arm's length prices.
A)True
B)False
Q2) An informal management control systems includes specific rules,procedures,and performance measures.
A)True
B)False
Q3) Management control systems motivate managers and other employees to exert effort through a variety of rewards tied to the achievement of goals.
A)True
B)False
Q4) Management control systems reflect only financial data.
A)True B)False
Q5) An important advantage of decentralized operations is that it improves corporate control.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Multinational Performance Measurement and Compensation
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/71030
Sample Questions
Q1) What is the Tractor Division's return on sales?
A)0.10
B)0.12
C)0.15
D)0.20
E)0.25
Q2) Team incentives encourage cooperation by
A)forcing people to work together on difficult tasks.
B)changing management style.
C)letting individuals help one another as they strive toward a common goal.
D)rewarding based on team performance.
E)rewarding team members individually.
Q3) Which of the following is TRUE concerning the ROI performance measure?
A)ROI is based on cash flow.
B)Is also called the accounting rate of return.
C)Some companies use net assets (assets minus liabilities)as the numerator.
D)The usual formulation is [total assets/ income ].
E)Net assets are sometimes used as the denominator,and net assets are sometimes used as the numerator.
Page 24
To view all questions and flashcards with answers, click on the resource link above.