Question 1

The series of activities in which customer usefulness is added to the product is the definition of:

Accepted Answer

A)  A value chain 
B)  Process value analysis 
C)  Integrated manufacturing 
D)  Activity based costing 
A)  A value chain 
B)  Process value analysis 
C)  Integrated manufacturing 
D)  Activity based costing

Question 2

FRM Corporation's managers have recently introduced new, more efficient equipment for feeding chickens. Under which of the following assumptions would life cycle costing be best applied?

Accepted Answer

A)  The product is being sold at a loss 
B)  The product is being sold at a small profit 
C)  The product is being sold at a loss, but expected to add to profits over time 
D)  The product is being sold at a small profit, which is expected to decline over time 
A)  The product is being sold at a loss 
B)  The product is being sold at a small profit 
C)  The product is being sold at a loss, but expected to add to profits over time 
D)  The product is being sold at a small profit, which is expected to decline over time

Question 3

Production under a value stream analysis system is based on customer demand.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements regarding lean accounting is incorrect?

Accepted Answer

A)  It emphasizes cost reduction and continuous improvement 
B)  Value stream analysis is used to examine and improve organizational processes from a customer perspective 
C)  Production occurs with a demand push system 
D)  Inventory is managed through a kanban system 
A)  It emphasizes cost reduction and continuous improvement 
B)  Value stream analysis is used to examine and improve organizational processes from a customer perspective 
C)  Production occurs with a demand push system 
D)  Inventory is managed through a kanban system

Question 5

WDY Corporation currently sells its primary product for $85 per unit, with a profit margin of 30%. Cost of goods sold totals 40% of the product's total cost. WDY's managers are considering implementing a Kaizen costing system.
As part of its Kaizen costing project, WDY's accountants estimate the price of the product will decline by 20% next year. To maintain the same profit margin, the total cost per unit will have to be reduced by:

Accepted Answer

A)  Less than 20% 
B)  Exactly 20% 
C)  More than 20% 
D)  Cannot be determined 
A)  Less than 20% 
B)  Exactly 20% 
C)  More than 20% 
D)  Cannot be determined

Question 6

Life cycle costing is a:

Accepted Answer

A)  Decision-making method that considers costs from the time the product is introduced through a number of years 
B)  Decision-making method that considers a target cost 
C)  Decision-making method that considers improvements in cost and quality over a product's life 
D)  Pricing method based on demand 
A)  Decision-making method that considers costs from the time the product is introduced through a number of years 
B)  Decision-making method that considers a target cost 
C)  Decision-making method that considers improvements in cost and quality over a product's life 
D)  Pricing method based on demand

Question 7

Because inventory level information is in a company's internal accounting records, suppliers cannot access it.

Accepted Answer

A) True 
 B)False

Question 8

Cost-based pricing:

Accepted Answer

A)  Considers price elasticity of demand 
B)  Is not commonly used 
C)  Uses a mark-up percentage 
D)  Is always based on variable cost 
A)  Considers price elasticity of demand 
B)  Is not commonly used 
C)  Uses a mark-up percentage 
D)  Is always based on variable cost

Question 9

Sportstuff, Inc. is investigating the feasibility of adding a new skateboard to its line-up of products. The marketing department believes that 10,000 units can be sold at $90 each. Sportstuff requires a 25% profit margin (i.e. cost is 75% of selling price) on all products.
To achieve its goal, Sportstuff must earn revenues on the product of:

Accepted Answer

A)  $225,000 
B)  $675,000 
C)  $506,250 
D)  $900,000 
A)  $225,000 
B)  $675,000 
C)  $506,250 
D)  $900,000

Question 10

Life cycle costing can be used to identify unprofitable products due to high costs at the end of a product's life. Which of the following is the best example of such a product?

Accepted Answer

A)  Nuclear reactors 
B)  Cherry orchards 
C)  CPA firms 
D)  Universities 
A)  Nuclear reactors 
B)  Cherry orchards 
C)  CPA firms 
D)  Universities

Question 11

A target cost is the minimum cost a company should strive for to obtain its desired profit margin.

Accepted Answer

A) True 
 B)False

Question 12

Target costing is most likely to be successful when the:

Accepted Answer

A)  Manufacturer is solely responsible for managing costs 
B)  Product is a commodity 
C)  Production process is complex 
D)  Managers and accountants make all of the decisions 
A)  Manufacturer is solely responsible for managing costs 
B)  Product is a commodity 
C)  Production process is complex 
D)  Managers and accountants make all of the decisions

Question 13

Target costing is a:

Accepted Answer

A)  Pricing method based on variable cost 
B)  Decision-making technique for deciding whether to produce a product 
C)  Pricing method based on total cost 
D)  Technique for costing inventory for financial statements 
A)  Pricing method based on variable cost 
B)  Decision-making technique for deciding whether to produce a product 
C)  Pricing method based on total cost 
D)  Technique for costing inventory for financial statements

Question 14

Value chain analysis examines:
I. Business processes
II. Value added and non-value added activities
III. Supply chains in addition to other processes

Accepted Answer

A)  I 
B)  I and III 
C)  I, II, and III 
D)  III 
A)  I 
B)  I and III 
C)  I, II, and III 
D)  III

Question 15

A just-in-time manufacturing system:

Accepted Answer

A)  Uses an assembly line for manufacturing 
B)  Is a process that requires a lot of storage area for inventories 
C)  Is a process in which it is difficult to maintain product quality 
D)  Is a demand-pull system 
A)  Uses an assembly line for manufacturing 
B)  Is a process that requires a lot of storage area for inventories 
C)  Is a process in which it is difficult to maintain product quality 
D)  Is a demand-pull system

Question 16

Target costing involves not only cost, but also product quality and functionality.

Accepted Answer

A) True 
 B)False

Question 17

An organization's value chain often includes suppliers and customers.

Accepted Answer

A) True 
 B)False

Question 18

Target costing is a technique to improve long-term profitability by considering product costs at the design phase.

Accepted Answer

A) True 
 B)False

Question 19

WDY Corporation currently sells its primary product for $85 per unit, with a profit margin of 30%. Cost of goods sold totals 40% of the product's total cost. WDY's managers are considering implementing a Kaizen costing system.
As part of its Kaizen costing project, WDY's accountants estimate the price of the product will decline by 20% next year. If WDY is successful in achieving its Kaizen goal, the reduced nonmanufacturing cost (i.e., the cost excluding the product cost) per unit will be:

Accepted Answer

A)  $47.60 
B)  $28.56 
C)  $19.04 
D)  $20.40 
A)  $47.60 
B)  $28.56 
C)  $19.04 
D)  $20.40

Question 20

Kaizen costing is a technique aimed at improvement of short-term profitability.

Accepted Answer

A) True 
 B)False

The series of activities in which customer usefulness is added to the product is the definition of:

FRM Corporation's managers have recently introduced new, more efficient equipment for feeding chickens. Under which of the following assumptions would life cycle costing be best applied?

Production under a value stream analysis system is based on customer demand.

Which of the following statements regarding lean accounting is incorrect?

Life cycle costing is a:

Because inventory level information is in a company's internal accounting records, suppliers cannot access it.

Cost-based pricing:

Life cycle costing can be used to identify unprofitable products due to high costs at the end of a product's life. Which of the following is the best example of such a product?

A target cost is the minimum cost a company should strive for to obtain its desired profit margin.

Target costing is most likely to be successful when the:

Target costing is a:

Value chain analysis examines: I. Business processes II. Value added and non-value added activities III. Supply chains in addition to other processes

A just-in-time manufacturing system:

Target costing involves not only cost, but also product quality and functionality.

An organization's value chain often includes suppliers and customers.

Target costing is a technique to improve long-term profitability by considering product costs at the design phase.

Kaizen costing is a technique aimed at improvement of short-term profitability.

The Role of Accounting Information in Ethical Management Decision Making

Cost Concepts, Behaviour, and Estimation

Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Job Costing

Process Costing

Activity-Based Costing and Management

Measuring and Assigning Support Department Costs

Joint Product and By-Product Costing

Static and Flexible Budgets

Standard Costs and Variance Analysis

Strategic Investment Decisions

Pricing Decisions

Strategic Management of Costs

Performance Evaluation and Compensation

Filters

Exam 15: Measuring and Assigning Costs for Income Statements

The series of activities in which customer usefulness is added to the product is the definition of:

FRM Corporation's managers have recently introduced new, more efficient equipment for feeding chickens. Under which of the following assumptions would life cycle costing be best applied?

Production under a value stream analysis system is based on customer demand.

Which of the following statements regarding lean accounting is incorrect?

Life cycle costing is a:

Because inventory level information is in a company's internal accounting records, suppliers cannot access it.

Cost-based pricing:

Life cycle costing can be used to identify unprofitable products due to high costs at the end of a product's life. Which of the following is the best example of such a product?

A target cost is the minimum cost a company should strive for to obtain its desired profit margin.

Target costing is most likely to be successful when the:

Target costing is a:

Value chain analysis examines: I. Business processes II. Value added and non-value added activities III. Supply chains in addition to other processes

A just-in-time manufacturing system:

Target costing involves not only cost, but also product quality and functionality.

An organization's value chain often includes suppliers and customers.

Target costing is a technique to improve long-term profitability by considering product costs at the design phase.

Kaizen costing is a technique aimed at improvement of short-term profitability.

The Role of Accounting Information in Ethical Management Decision Making

Cost Concepts, Behaviour, and Estimation

Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Job Costing

Process Costing

Activity-Based Costing and Management

Measuring and Assigning Support Department Costs

Joint Product and By-Product Costing

Static and Flexible Budgets

Standard Costs and Variance Analysis

Strategic Investment Decisions

Pricing Decisions

Strategic Management of Costs

Performance Evaluation and Compensation

Filters