Question 1

It is relatively easy to identify unused capacity for discretionary costs.

Accepted Answer

A) True 
 B)False

Question 2

Following a strategy of product differentiation, Americonic Corporation makes a high-end computer monitor. Americonic Corporation presents the following data for the years 2017 and 2018:
   
Somerset Corporation produces no defective units but it wants to reduce direct materials usage per unit in 2018. Manufacturing conversion costs in each year depend on production capacity defined in terms of units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Ernsting Corporation has 100 customers in 2017 and 115 customers in 2018. The industry market size for high-end computer monitors increased 5% from 2017 to 2018.
Required:
a.What is the revenue effect of the growth component?
b.What is the cost effect of the growth component?
c.What is the net effect on operating income as a result of the growth component?

Accepted Answer

a.(6,500 - 6,000) × $420 = $210,000 F
b.

Question 3

The cost effect of productivity for variable costs is calculated by multiplying the difference in actual input units used to produce current year output and units of input required to produce current year output in previous year by the ________.

Accepted Answer

A)  price per input unit of previous year 
B)  price per unit of capacity in the previous year 
C)  price per unit of capacity in the current year 
D)  price per input unit of current year 
A)  price per input unit of previous year 
B)  price per unit of capacity in the previous year 
C)  price per unit of capacity in the current year 
D)  price per input unit of current year

Question 4

Advanced Productivity Company provided the following information:
 
What is the partial productivity ratio?

Accepted Answer

A)  0.34 units per gallon 
B)  0.42 units per gallon 
C)  0.35 units per gallon 
D)  0.43 units per gallon 
A)  0.34 units per gallon 
B)  0.42 units per gallon 
C)  0.35 units per gallon 
D)  0.43 units per gallon

Question 5

Foley Products Company makes a household appliance with model number X500. The goal for 2018 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of X500 units that can be produced. The industry market size for appliances increased 10% from 2017 to 2018. The following additional data are available for 2017 and 2018:
 
What is operating income for 2017?

Accepted Answer

A)  $1,530,000 
B)  $2,240,000 
C)  $1,890,000 
D)  $1,880,000 
A)  $1,530,000 
B)  $2,240,000 
C)  $1,890,000 
D)  $1,880,000

Question 6

What is the term that describes an organization's ability to offer products or services that are perceived by its customers as being superior and unique relative to those of its competitors?

Accepted Answer

A)  Strategy 
B)  Product differentiation 
C)  Cost leadership 
D)  The balanced scorecard 
A)  Strategy 
B)  Product differentiation 
C)  Cost leadership 
D)  The balanced scorecard

Question 7

Which of the following is NOT a discretionary cost?

Accepted Answer

A)  the cost of social networking activities to promote a product 
B)  the cost of total quality management training for executives 
C)  legal costs 
D)  the cost to train factory general managers to use a new activity based management system 
A)  the cost of social networking activities to promote a product 
B)  the cost of total quality management training for executives 
C)  legal costs 
D)  the cost to train factory general managers to use a new activity based management system

Question 8

Which of the following is not correct about the balanced scorecard?

Accepted Answer

A)  profits and value created for shareholders are perspectives revealed on a balance scorecard 
B)  nonfinancial and operational indicators are reported on a balance scorecard 
C)  the balanced scorecard reveals information about the success of the company in its target market 
D)  the balance scorecard increases managements emphasis on short-term results 
A)  profits and value created for shareholders are perspectives revealed on a balance scorecard 
B)  nonfinancial and operational indicators are reported on a balance scorecard 
C)  the balanced scorecard reveals information about the success of the company in its target market 
D)  the balance scorecard increases managements emphasis on short-term results

Question 9

Following a strategy of product differentiation, Izzy's Limited Company makes a high-end Appliance, XT15. Izzy's Limited presents the following data for the years 2017 and 2018:
 
Izzy's Limited produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Izzy's Limited had 145 customers in 2017 and 150 customers in 2018.
What is the net effect on operating income as a result of the productivity component? (Round any intermediary calculations to two decimals and your final answer to the nearest dollar.)

Accepted Answer

A)  $1,664,016 U 
B)  $124,672 F 
C)  $1,664,016 F 
D)  $124,672 U 
A)  $1,664,016 U 
B)  $124,672 F 
C)  $1,664,016 F 
D)  $124,672 U

Question 10

Trusted Products Company makes a household appliance with model number L800. The goal for 2018 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of L800 units that can be produced. The industry market size for appliances increased 2% from 2017 to 2018. The following additional data are available for 2017 and 2018:
 
Overall, was Trusted Products's strategy successful in 2018?

Accepted Answer

A)  Yes, because total revenues increased 
B)  No, because operating income decreased 
C)  No, because direct materials usage per unit increased 
D)  No, because direct material cost per unit decreased 
A)  Yes, because total revenues increased 
B)  No, because operating income decreased 
C)  No, because direct materials usage per unit increased 
D)  No, because direct material cost per unit decreased

Question 11

Which of the following is NOT an engineered cost?

Accepted Answer

A)  direct material cost of a major component of the product 
B)  advertising costs for a new product that the factory will start producing 
C)  the cost of direct laborers who work in the factory 
D)  depreciation of all factory tools 
A)  direct material cost of a major component of the product 
B)  advertising costs for a new product that the factory will start producing 
C)  the cost of direct laborers who work in the factory 
D)  depreciation of all factory tools

Question 12

A company's balanced scorecard measures yield, order-delivery time, cycle time, and errors as part of which of the following perspectives?

Accepted Answer

A)  Financial 
B)  Customer 
C)  Internal-business-process 
D)  Learning-and-growth 
A)  Financial 
B)  Customer 
C)  Internal-business-process 
D)  Learning-and-growth

Question 13

In an effective balanced scorecard, ________.

Accepted Answer

A)  net income serves as the best indicator for the hard-to measure long-run operational performance 
B)  the sales budget serves as one of the leading indicator for the hard-to measure short-run financial performance 
C)  the sales budget serves as a leading indicator for the hard-to measure short-run nonfinancial performance 
D)  customer satisfaction serves as one of the leading indicator for the hard-to measure long-run financial performance such as the likelihood of higher sales and income 
A)  net income serves as the best indicator for the hard-to measure long-run operational performance 
B)  the sales budget serves as one of the leading indicator for the hard-to measure short-run financial performance 
C)  the sales budget serves as a leading indicator for the hard-to measure short-run nonfinancial performance 
D)  customer satisfaction serves as one of the leading indicator for the hard-to measure long-run financial performance such as the likelihood of higher sales and income

Question 14

Following a strategy of product differentiation, Izzy's Limited Company makes a high-end Appliance, XT15. Izzy's Limited presents the following data for the years 2017 and 2018:
 
Izzy's Limited produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Izzy's Limited had 135 customers in 2017 and 140 customers in 2018.
What is the change in operating income from 2017 to 2018?

Accepted Answer

A)  $2,418,350 U 
B)  $3,740,000 F 
C)  $2,418,350 F 
D)  $3,740,000 U 
A)  $2,418,350 U 
B)  $3,740,000 F 
C)  $2,418,350 F 
D)  $3,740,000 U

Question 15

When analyzing the change in operating income, the strategy component of productivity will increase when ________.

Accepted Answer

A)  capacity is reduced 
B)  quality is enhanced 
C)  selling prices are increased 
D)  more units are produced and sold 
A)  capacity is reduced 
B)  quality is enhanced 
C)  selling prices are increased 
D)  more units are produced and sold

Question 16

When analyzing the change in operating income, the strategy component of price-recovery will increase when ________.

Accepted Answer

A)  capacity is reduced 
B)  market share is increased 
C)  selling prices are increased 
D)  more units are sold 
A)  capacity is reduced 
B)  market share is increased 
C)  selling prices are increased 
D)  more units are sold

Question 17

Following a strategy of product differentiation, Izzy's Limited Company makes a high-end Appliance, XT15. Izzy's Limited presents the following data for the years 2017 and 2018:
 
Izzy's Limited produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Izzy's Limited had 180 customers in 2017 and 185 customers in 2018.
What is the revenue effect of the price-recovery component?

Accepted Answer

A)  $3,132,000 U 
B)  $1,320,000 U 
C)  $1,320,000 F 
D)  $3,132,000 F 
A)  $3,132,000 U 
B)  $1,320,000 U 
C)  $1,320,000 F 
D)  $3,132,000 F

Question 18

The partial productivity of overhead resources can be measured by considering the cost driver as ________.

Accepted Answer

A)  budgeted input 
B)  the denominator 
C)  the fixed input 
D)  the numerator 
A)  budgeted input 
B)  the denominator 
C)  the fixed input 
D)  the numerator

Question 19

An organization which uses product differentiation strategy will charge higher prices.

Accepted Answer

A) True 
 B)False

Question 20

The percentage of processes with real-time feedback would be a measure of which perspective?

Accepted Answer

A)  marketing 
B)  customer 
C)  learning and growth 
D)  internal-business-process 
A)  marketing 
B)  customer 
C)  learning and growth 
D)  internal-business-process

It is relatively easy to identify unused capacity for discretionary costs.

The cost effect of productivity for variable costs is calculated by multiplying the difference in actual input units used to produce current year output and units of input required to produce current year output in previous year by the ________.

Advanced Productivity Company provided the following information: What is the partial productivity ratio?

What is the term that describes an organization's ability to offer products or services that are perceived by its customers as being superior and unique relative to those of its competitors?

Which of the following is NOT a discretionary cost?

Which of the following is not correct about the balanced scorecard?

Which of the following is NOT an engineered cost?

A company's balanced scorecard measures yield, order-delivery time, cycle time, and errors as part of which of the following perspectives?

In an effective balanced scorecard, ________.

When analyzing the change in operating income, the strategy component of productivity will increase when ________.

When analyzing the change in operating income, the strategy component of price-recovery will increase when ________.

The partial productivity of overhead resources can be measured by considering the cost driver as ________.

An organization which uses product differentiation strategy will charge higher prices.

The percentage of processes with real-time feedback would be a measure of which perspective?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 12: Strategy, Balanced Scorecard, and Strategic Profitability Analysis

It is relatively easy to identify unused capacity for discretionary costs.

The cost effect of productivity for variable costs is calculated by multiplying the difference in actual input units used to produce current year output and units of input required to produce current year output in previous year by the ________.

Advanced Productivity Company provided the following information: What is the partial productivity ratio?

What is the term that describes an organization's ability to offer products or services that are perceived by its customers as being superior and unique relative to those of its competitors?

Which of the following is NOT a discretionary cost?

Which of the following is not correct about the balanced scorecard?

Which of the following is NOT an engineered cost?

A company's balanced scorecard measures yield, order-delivery time, cycle time, and errors as part of which of the following perspectives?

In an effective balanced scorecard, ________.

When analyzing the change in operating income, the strategy component of productivity will increase when ________.

When analyzing the change in operating income, the strategy component of price-recovery will increase when ________.

The partial productivity of overhead resources can be measured by considering the cost driver as ________.

An organization which uses product differentiation strategy will charge higher prices.

The percentage of processes with real-time feedback would be a measure of which perspective?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters