Question 1

A company that has decided to emphasize efficiency over responsiveness will find that it is unable to:

Accepted Answer

A)  Meet unexpected fluctuations in demand for its products. 
B)  Make use of idle capacity to fill a large unexpected order from a new customer. 
C)  Take advantage of a relatively expensive location near key sources of supply to shorten its cycle time. 
D)  All of the above. 
A)  Meet unexpected fluctuations in demand for its products. 
B)  Make use of idle capacity to fill a large unexpected order from a new customer. 
C)  Take advantage of a relatively expensive location near key sources of supply to shorten its cycle time. 
D)  All of the above.

Question 2

In its most recently completed quarter, HighRisk Limited reported total net assets of $20 billion and leverage of 500%. What amount of debt is included in HighRisk's capital structure?

Accepted Answer

A)  $4 billion. 
B)  $100 billion. 
C)  $16 billion. 
D)  Can only be determined if profit margin and asset intensity are known. 
A)  $4 billion. 
B)  $100 billion. 
C)  $16 billion. 
D)  Can only be determined if profit margin and asset intensity are known.

Question 3

Scope is a measure of the degree of vertical integration a firm chooses.

Accepted Answer

A) True 
 B)False

Question 4

Value migration or the flow of market value from one firm to another in the industry value chain occurs over time because:

Accepted Answer

A)  Virtual integration has taken place across the value chain. 
B)  All firms in the value chain have cooperated to strengthen the weakest link. 
C)  One firm does a better job of serving customers than others. 
D)  One firm minimizes its channel costs. 
A)  Virtual integration has taken place across the value chain. 
B)  All firms in the value chain have cooperated to strengthen the weakest link. 
C)  One firm does a better job of serving customers than others. 
D)  One firm minimizes its channel costs.

Question 5

The tactics chosen to manage its position in the supply chain will determine if a firm will be efficient or responsive.

Accepted Answer

A) True 
 B)False

Question 6

Each firm in an industry value chain vies for power not only with its customers but its suppliers.

Accepted Answer

A) True 
 B)False

Question 7

A linked set of companies that participate in the design, provision, and support of a product describes:

Accepted Answer

A)  An industry value chain. 
B)  An oligopoly. 
C)  The internal value chain. 
D)  The five forces of competition. 
A)  An industry value chain. 
B)  An oligopoly. 
C)  The internal value chain. 
D)  The five forces of competition.

Question 8

Recently Old Forge Company reported that it had earned a profit margin of 20% on sales of $10 million. Its net assets totaling $25 million were financed by equal amounts of debt and equity. What return on equity did Old Forge earn?

Accepted Answer

A)  16% 
B)  8% 
C)  40% 
D)  20% 
A)  16% 
B)  8% 
C)  40% 
D)  20%

Question 9

Apex Corporation controls the sole source of a critical raw material required to produce ACE inhibitors, one of the types of drugs used to control blood pressure. The other major class of blood pressure medications, called beta-blockers, do not require the material supplied by Apex. In its industry value chain, which of the five forces places a limit on Apex's competitive advantage?

Accepted Answer

A)  New entrants into the market as producers of ACE inhibitors. 
B)  Raw material substitutes. 
C)  Customers/patients able to use beta-blockers to control blood pressure. 
D)  Other raw material suppliers. 
A)  New entrants into the market as producers of ACE inhibitors. 
B)  Raw material substitutes. 
C)  Customers/patients able to use beta-blockers to control blood pressure. 
D)  Other raw material suppliers.

Question 10

Simple Company reported the following: sales of $10 million; profit of $1.5 million; asset intensity of 40%; and leverage of 400%. What amount of total net assets did Simple Company's report?

Accepted Answer

A)  $40 million 
B)  $600,000 
C)  $4 million 
D)  $25 million 
A)  $40 million 
B)  $600,000 
C)  $4 million 
D)  $25 million

Question 11

As compared to a convergent value chain, a divergent structure holds the potential for significant power on the part of a given supplier.

Accepted Answer

A) True 
 B)False

Question 12

Of the following, which is not one of the five major supply chain drivers?

Accepted Answer

A)  New entrants. 
B)  Production. 
C)  Location. 
D)  Information. 
A)  New entrants. 
B)  Production. 
C)  Location. 
D)  Information.

Question 13

SmoothNTasty, Inc., is a leading producer of high-quality Greek yogurt. The company originally maintained its own dairy farms as the sole source of milk used in its yogurt products. It has recently sold all of its interests in these dairy farms and now focuses on the production of yogurt. The value chain of which SmoothNTasty is a part has experienced:

Accepted Answer

A)  De-integration. 
B)  Integration. 
C)  Value chain squeeze. 
D)  Value migration. 
A)  De-integration. 
B)  Integration. 
C)  Value chain squeeze. 
D)  Value migration.

Question 14

An industry value chain that contains numerous suppliers of raw materials and semifinished components is best described as:

Accepted Answer

A)  Convergent. 
B)  Internal. 
C)  External. 
D)  Divergent. 
A)  Convergent. 
B)  Internal. 
C)  External. 
D)  Divergent.

Question 15

A firm's ability to create and capture value in the marketplace is effectively measured by:

Accepted Answer

A)  Its degree of leverage. 
B)  Its asset intensity. 
C)  The sum of its long-term debt and the value of its outstanding shares of stock. 
D)  Its throughput. 
A)  Its degree of leverage. 
B)  Its asset intensity. 
C)  The sum of its long-term debt and the value of its outstanding shares of stock. 
D)  Its throughput.

Question 16

A company that is only able to earn a small profit margin and achieve low asset intensity or turnover can still earn an adequate return on equity by:

Accepted Answer

A)  Avoiding non-value-added activities. 
B)  Employing a high degree of leverage. 
C)  Establishing a monopoly position. 
D)  Relying on perceptual cost drivers. 
A)  Avoiding non-value-added activities. 
B)  Employing a high degree of leverage. 
C)  Establishing a monopoly position. 
D)  Relying on perceptual cost drivers.

Question 17

Crisps, Inc., is a manufacturer of potato chips. Its value chain partners and information relating to the potato chip market is given in the table below.
   Required: 
a. Compute the profit on sales, sales per assets, and return on assets for each firm in the value chain.
b. Which firm has the best position in the value chain? Explain.

Accepted Answer

Crisps, Inc.is a manufacturer of potato

Question 18

A divergent value chain is one where multiple players converge to one final channel to the customer.

Accepted Answer

A) True 
 B)False

Question 19

Integrated supply chain management is most concerned with managing the trade-off between responsiveness and efficiency.

Accepted Answer

A) True 
 B)False

Question 20

A company that maintains larger average inventories and outstanding accounts receivables balances than the other participants in its value chain will probably suffer low asset intensity.

Accepted Answer

A) True 
 B)False

A company that has decided to emphasize efficiency over responsiveness will find that it is unable to:

In its most recently completed quarter, HighRisk Limited reported total net assets of $20 billion and leverage of 500%. What amount of debt is included in HighRisk's capital structure?

Scope is a measure of the degree of vertical integration a firm chooses.

Value migration or the flow of market value from one firm to another in the industry value chain occurs over time because:

The tactics chosen to manage its position in the supply chain will determine if a firm will be efficient or responsive.

Each firm in an industry value chain vies for power not only with its customers but its suppliers.

A linked set of companies that participate in the design, provision, and support of a product describes:

Recently Old Forge Company reported that it had earned a profit margin of 20% on sales of $10 million. Its net assets totaling $25 million were financed by equal amounts of debt and equity. What return on equity did Old Forge earn?

Simple Company reported the following: sales of $10 million; profit of $1.5 million; asset intensity of 40%; and leverage of 400%. What amount of total net assets did Simple Company's report?

As compared to a convergent value chain, a divergent structure holds the potential for significant power on the part of a given supplier.

Of the following, which is not one of the five major supply chain drivers?

An industry value chain that contains numerous suppliers of raw materials and semifinished components is best described as:

A firm's ability to create and capture value in the marketplace is effectively measured by:

A company that is only able to earn a small profit margin and achieve low asset intensity or turnover can still earn an adequate return on equity by:

A divergent value chain is one where multiple players converge to one final channel to the customer.

Integrated supply chain management is most concerned with managing the trade-off between responsiveness and efficiency.

A company that maintains larger average inventories and outstanding accounts receivables balances than the other participants in its value chain will probably suffer low asset intensity.

Business Planning and Analysis: An Integrative Framework for Management Accounting

Measuring and Evaluating Performance

Defining and Using Cost Estimates

Cost Pools, Capacity, and Activity- Based Costing

Understanding the Management Process

Planning in the Product Domain

Assessing and Improving Product Profitability

Setting Process Expectations

Evaluating and Improving Process Performance

Setting Performance Expectations at the Entity Level

Setting Performance Expectations in Large, Complex Organizations

Evaluating and Improving Entity Performance

Setting and Achieving Targets in the Customer Domain

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Exam 14: Strategic Cost Management and the Value Chain Domain

A company that has decided to emphasize efficiency over responsiveness will find that it is unable to:

In its most recently completed quarter, HighRisk Limited reported total net assets of $20 billion and leverage of 500%. What amount of debt is included in HighRisk's capital structure?

Scope is a measure of the degree of vertical integration a firm chooses.

Value migration or the flow of market value from one firm to another in the industry value chain occurs over time because:

The tactics chosen to manage its position in the supply chain will determine if a firm will be efficient or responsive.

Each firm in an industry value chain vies for power not only with its customers but its suppliers.

A linked set of companies that participate in the design, provision, and support of a product describes:

Recently Old Forge Company reported that it had earned a profit margin of 20% on sales of $10 million. Its net assets totaling $25 million were financed by equal amounts of debt and equity. What return on equity did Old Forge earn?

Simple Company reported the following: sales of $10 million; profit of $1.5 million; asset intensity of 40%; and leverage of 400%. What amount of total net assets did Simple Company's report?

As compared to a convergent value chain, a divergent structure holds the potential for significant power on the part of a given supplier.

Of the following, which is not one of the five major supply chain drivers?

An industry value chain that contains numerous suppliers of raw materials and semifinished components is best described as:

A firm's ability to create and capture value in the marketplace is effectively measured by:

A company that is only able to earn a small profit margin and achieve low asset intensity or turnover can still earn an adequate return on equity by:

A divergent value chain is one where multiple players converge to one final channel to the customer.

Integrated supply chain management is most concerned with managing the trade-off between responsiveness and efficiency.

A company that maintains larger average inventories and outstanding accounts receivables balances than the other participants in its value chain will probably suffer low asset intensity.

Business Planning and Analysis: An Integrative Framework for Management Accounting

Measuring and Evaluating Performance

Defining and Using Cost Estimates

Cost Pools, Capacity, and Activity- Based Costing

Understanding the Management Process

Planning in the Product Domain

Assessing and Improving Product Profitability

Setting Process Expectations

Evaluating and Improving Process Performance

Setting Performance Expectations at the Entity Level

Setting Performance Expectations in Large, Complex Organizations

Evaluating and Improving Entity Performance

Setting and Achieving Targets in the Customer Domain

Filters