Strategic Management Accounting
Practice Questions
Course Introduction
Strategic Management Accounting focuses on the integration of accounting information with strategic decision-making processes to enhance organizational performance. The course explores advanced management accounting techniques, including budgeting, variance analysis, performance measurement, and cost management, within the context of achieving long-term business objectives. It emphasizes the role of accounting data in formulating, implementing, and evaluating business strategies, and discusses contemporary issues such as value chain analysis, balanced scorecard, and competitor analysis. Students will develop analytical skills to interpret financial and non-financial information and apply it to strategic planning and control in dynamic business environments.
Recommended Textbook
Management Accounting 6th Edition by
Anthony A. Atkinson
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Page 2
Chapter 1: How Management Accounting Information
Supports Decision Making
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Sample Questions
Q1) Which of the following best represents the Check step in the Plan-Do-Check-Act (PDCA)cycle?
A)Take actions to lower costs, change resource allocations, improve the quality, cycle time and flexibility of processes, modify the product mix, change customer relationships, and redesign and introduce new products.
B)Measure and monitor ongoing performance and take short-term actions based on the measured performance.
C)Define the organization's purpose and select the focus and scope of its strategy.
D)Implement the chosen course of action.
Answer: C
Q2) The Hawthorne study revealed that:
A)individuals alter their behavior when they know they are being studied.
B)groups alter their behavior when they know they are being studied.
C)People react when they are being measured.
D)All of the above are correct.
Answer: D
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3
Chapter 2: The Balanced Scorecard and Strategy Map
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Sample Questions
Q1) Important measures in the customer perspective usually include the percentage of repeat customers and growth in sales to existing customers.
A)True
B)False
Answer: True
Q2) Strategy creates a competitive advantage by positioning the company in its external environment where its internal resources and capabilities deliver something to its customers better than or different from its competitors.
A)True
B)False Answer: True
Q3) Draw a strategy map that identifies the cause-and-effect linkages of the following objectives:
Process quality
Customer loyalty
Skilled production workers Return on investment
Answer: Skilled production workers Process quality Customer loyalty Return on investment
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4
Chapter 3: Using Costs in Decision Making
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Sample Questions
Q1) What should Jim do? What are his savings in the first year?
A)Buy the Honda Civic; $9,780.
B)Fix the Hyundai Elantra; $5,518.
C)Buy the Honda Civic; $180.
D)Fix the Hyundai Elantra; $5,280.
Answer: C
Q2) Which costs are relevant for making decisions that affect the short-term? The long-term? Why?
Answer: Relevant costs for making decisions that affect the short term include variable costs, since these are the only costs that can be adjusted in the short term. All costs are relevant for making decisions that affect the long term, because in the long term all costs can be adjusted.
Q3) Opportunity costs are implicit costs.
A)True
B)False
Answer: True
Q4) For decision-making,differential costs assist in choosing between alternatives.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Accumulating and Assigning Costs to Products
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Sample Questions
Q1) All of the following create problems with accurate product or job costing except:
A)incorrect job numbers are recorded on source documents.
B)bar coding is used to record materials used on the job.
C)using budgeted overhead costs to determine overhead cost allocation rates.
D)a computer screen requests an employee number before that employee is able to work on information related to a specific job.
Q2) In job order costing,only direct costs are used to determine the cost of a job.
A)True
B)False
Q3) An indirect cost will be traced to the cost object. A)True
B)False
Q4) While costs are measured for individual jobs in a job order costing system,they are measured for individual process stages in a process costing system.
A)True
B)False
Q5) Three types of product costs are estimated on a job bid sheet.List each of these costs and explain how each is estimated.
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Chapter 5: Activity-Based Cost Systems
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Sample Questions
Q1) Traditional cost systems use actual departments or cost centers for defining cost pools to accumulate and redistribute costs.
A)True
B)False
Q2) The focus of ABC systems is on:
A)long-term decisions.
B)short-term decisions.
C)make-or-buy decisions.
D)special-pricing decisions.
Q3) Which of the following is a sign that an ABC system may be useful?
A)There are small amounts of overhead costs.
B)Products make diverse demands on resources because of differences in volume, process steps, batch size, or complexity.
C)Products a company all show large profits.
D)Operations throughout the plant are fairly similar.
Q4) The selection of activity cost drivers requires making choices related to the usage of transaction drivers,duration drivers,and intensity drivers.
A)True
B)False
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Chapter 6: Measuring and Managing Customer Relationships
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Sample Questions
Q1) Companies can use time-driven ABC costing systems to create customer-specific profit and loss statements.
A)True
B)False
Q2) Customer financial performance:
A)are best measured with financial metrics.
B)are reflected on the balanced scorecard as part of the learning and growth perspective.
C)can be improved by offering special features, and highly responsive customer service.
D)is improved by focusing on a combination of financial and nonfinancial metrics.
Q3) Describe five reasons that loyal customers are valuable.
Q4) Many costs of marketing,selling,and distribution expenses are incurred not to support individual products or product lines,but rather to support customers,market segments or distribution channels.
A)True
B)False
Q5) Discuss the 80-20 rule and the 40-1 rule.
Q6) Describe the pricing waterfall.
Page 8
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Chapter 7: Measuring and Managing Process Performance
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Sample Questions
Q1) The cost of reworking defective components is an example of:
A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.
Q2) Kaizen costing requires relevant financial results to be shared with front-line employees.
A)True
B)False
Q3) Warranty costs are an example of:
A)prevention costs.
B)appraisal costs.
C)internal failure costs.
D)external failure costs.
Q4) Constraints from the theory of constraints may include:
A)the availability of direct materials in manufacturing.
B)linear square feet of display space for a retailer.
C)direct labor in the service industry.
D)All of the above are correct.
Q5) Why is a cost-of-quality report useful?
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Chapter 8: Measuring and Managing Life-Cycle Costs
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Sample Questions
Q1) What is the change in profit margin if Marketing is correct and only the sales price is changed?
A)$1,100,000
B)$300,000
C)$(1,100,000)
D)$(2,900,000)
Q2) The characteristic of a management accounting and control system that means the language used and the technical methods of producing management accounting information not conflict within various parts of the organization is referred to as being:
A)in control.
B)accurate.
C)consistent.
D)Kaizen.
Q3) The post-sale service and disposal cycle is distinct from the manufacturing cycle.
A)True
B)False
Q4) How does the total-life-cycle costing approach differ from traditional product costing? Explain.
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Chapter 9: Behavioral and Organizational Issues in Management Accounting and Control Systems
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Sample Questions
Q1) ________ refers to the amount of effort the employee expends on a job or specific task.
A)Direction
B)Persistence
C)Duration
D)Intensity
Q2) Budgeting slack is most likely to occur when a firm uses the budget only as a planning device and not for control.
A)True
B)False
Q3) The BEST description of participative budgeting is that:
A)lower-level managers and employees initially prepare the budget.
B)managers and employees at many levels are involved with the budgeting process.
C)the budget is prepared by the top managers.
D)top management sets figures for all operating activities and these amounts are not negotiable.
Q4) Should management implement a new management accounting and control system without consulting employees? Why or why not?
Q5) What is stretch budgeting? Why is it used?
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Chapter 10: Using Budgets for Planning and Coordination
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Sample Questions
Q1) For October,budgeted cash payments for purchases are:
A)$14,000.
B)$60,000.
C)$70,000.
D)None of the above is correct.
Q2) Once authorized,discretionary spending budgets are committed or fixed and do not vary with levels of production or service.
A)True
B)False
Q3) Painting capacity appears to be:
A)short-term capacity.
B)intermediate-term capacity.
C)long-term capacity.
D)total demand.
Q4) A budget is a qualitative expression of the cash inflows and outflows that show whether the current operating plan will meet the firm's organizational objectives.
A)True
B)False
Q5) Describe the benefits to an organization of preparing an operating budget.
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Chapter 11: Financial Control
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Sample Questions
Q1) Assume that the Sundries department has been discontinued and long-term capacity of the company has had time to adjust.The projected long-term effect of this action on annual corporate profits would be a decrease of:
A)$40,000.
B)$32,000.
C)$29,000.
D)$22,000.
Q2) Assume an organization's cost of capital is 8% and Department A currently has a 12% return on investment (ROI).The manager of Department A,who is evaluated on ROI,would
MOST likely accept an investment that is expected to return:
A)more than 8%.
B)more than 12%.
C)more than 8% but less than 12%.
D)less than 12%.
Q3) Properly chosen nonfinancial measures anticipate and help to explain financial results in an organization.
A)True
B)False
Q4) What is financial control and how does it relate to nonfinancial measures?
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