Question 1

Which of the following is not a characteristic of the discretionary-cost approach?

Accepted Answer

A)  Costs are mainly fixed. 
B)  Outputs are not controllable. 
C)  The focus is on planning. 
D)  Firms use an output-oriented evaluation focus. 
A)  Costs are mainly fixed. 
B)  Outputs are not controllable. 
C)  The focus is on planning. 
D)  Firms use an output-oriented evaluation focus.

Question 2

Zhender Inc. manufactures hair brushes that sell at wholesale for $2.60 per unit. Budgeted production in both 2018 and 2019 was 3,000 units. There was no beginning inventory in 2018. The following data summarized the 2018 and 2019 operations:$\begin{array}{lcc} 
& 2018 & 2019 \
\text { Units sold } & 2,500 & 3,200 \
\text { Units produced } & 3,000 & 3,000\\text { Costs: }\
\text { Variable factory overhead per unit } & \$  0.65 & \$  0.65 \
\text { Fixed factory overhead } & \$ 1,290 & \$ 1,290 \
\text { Variable marketing per unit } & \$  0.80 & \$  0.80 \
\text { Fixed Selling and Administrative } & \$  650 & \$  650
\end{array}$Full costing operating income for 2019 is calculated to be:

Accepted Answer

A)  $850. 
B)  $1,150. 
C)  $1,295. 
D)  $1,654. 
E)  $1,740. 
A)  $850. 
B)  $1,150. 
C)  $1,295. 
D)  $1,654. 
E)  $1,740.

Question 3

Lawson Company had the following manufacturing information for the current year. Assume the same per unit costs occurred in the prior year. Required:
Determine operating income under both full costing and variable costing and explain the difference.

Accepted Answer

[This is a suggested

Question 4

The most important objective of a strategic performance measurement system is:

Accepted Answer

A)  Budgeting. 
B)  Motivation. 
C)  Authority. 
D)  Variances. 
E)  Pricing. 
A)  Budgeting. 
B)  Motivation. 
C)  Authority. 
D)  Variances. 
E)  Pricing.

Question 5

The principal-agent economic model applied to employment contracts includes two of the following management performance aspects:

Accepted Answer

A)  Rights and duties. 
B)  Uncertainty and lack of observability. 
C)  Performance and reward. 
D)  Controllability and responsibility. 
E)  Risk and motivation. 
A)  Rights and duties. 
B)  Uncertainty and lack of observability. 
C)  Performance and reward. 
D)  Controllability and responsibility. 
E)  Risk and motivation.

Question 6

For production and support departments, a method of implementing cost centers that is input-oriented is the:

Accepted Answer

A)  Budget slack method. 
B)  Cost shifting method. 
C)  Outsourcing method. 
D)  Discretionary-cost method. 
E)  Engineered-cost method. 
A)  Budget slack method. 
B)  Cost shifting method. 
C)  Outsourcing method. 
D)  Discretionary-cost method. 
E)  Engineered-cost method.

Question 7

Strategic performance measurement is a(n):

Accepted Answer

A)  Accounting system used by top management for the evaluation of SBU managers. 
B)  System of shared responsibility. 
C)  Accounting system for determining strategy. 
D)  System to design and implement the balanced scorecard. 
A)  Accounting system used by top management for the evaluation of SBU managers. 
B)  System of shared responsibility. 
C)  Accounting system for determining strategy. 
D)  System to design and implement the balanced scorecard.

Question 8

Among the benefits of centralized management in a firm is(are):

Accepted Answer

A)  Effective goal congruence. 
B)  Utilization of expertise of top management. 
C)  Effective participation by all levels of management. 
D)  A higher level of motivation for divisional managers. 
A)  Effective goal congruence. 
B)  Utilization of expertise of top management. 
C)  Effective participation by all levels of management. 
D)  A higher level of motivation for divisional managers.

Question 9

Writer One Inc. manufactures ball point pens that sell at wholesale for $0.80 per unit. Budgeted production in both 2018 and 2019 was 8,000 units. There was no beginning inventory in 2018. The following data summarized the 2018 and 2019 operations:$\begin{array}{lcc} 
& 2018 & 2019 \
\text { Units sold } & 6,500 & 9,000 \
\text { Units produced } & 8,000 & 8,000\\text { Costs: }\
\text { Variable factory overhead per unit } & \$ 0.20 & \$ 0.20 \
\text { Fixed factory overhead } & \$ 1,200& \$ 1,200 \
\text { Variable marketing per unit } & \$  0.30& \$  0.30 \
\text { Fixed Selling and Administrative } & \$  320& \$  320
\end{array}$Variable costing operating income for 2019 is calculated to be:

Accepted Answer

A)  $149. 
B)  $430. 
C)  $655. 
D)  $1,030. 
E)  $1,180. 
A)  $149. 
B)  $430. 
C)  $655. 
D)  $1,030. 
E)  $1,180.

Question 10

Fitzpatrick Inc. planned and manufactured 500,000 units of its single product in 2019, its first year of operations. Variable manufacturing costs were $40 per unit of production. Planned fixed manufacturing costs were $1,200,000. Marketing and administrative costs (all fixed) were $500,000 in 2019. Fitzpatrick sold 450,000 units of products in 2019 at $50 per unit.

Required:
1. Determine Fitzpatrick Inc.'s operating income using full costing.
2. Determine Fitzpatrick Inc.'s operating income using variable costing.
3. Explain the difference between the operating incomes in requirements 1 and 2.

Accepted Answer

1, 2 & 3.
 [This is

Question 11

SBUs that generate revenues and incur the major portion of the cost for producing those revenues are:

Accepted Answer

A)  Revenue centers. 
B)  Contribution centers. 
C)  Profit centers. 
D)  Cost centers. 
E)  Investment centers. 
A)  Revenue centers. 
B)  Contribution centers. 
C)  Profit centers. 
D)  Cost centers. 
E)  Investment centers.

Question 12

Companies use the balanced scorecard to describe strategy in detail through the use of a cause-and-effect diagram which is also known as a(n):

Accepted Answer

A)  Status Diagram. 
B)  Strategy Map. 
C)  Performance Flowchart. 
D)  Organizational Diagram. 
E)  Operational Work-through. 
A)  Status Diagram. 
B)  Strategy Map. 
C)  Performance Flowchart. 
D)  Organizational Diagram. 
E)  Operational Work-through.

Question 13

A company's operating income was $70,000 using variable costing for a given period.Beginning and ending inventories for that period were 45,000 units and 50,000 units, respectively.Ignoring income taxes, if the fixed factory overhead application rate was $8.00 per unit, what would operating income have been using full costing?

Accepted Answer

A) $30,000. 
B) $140,000. 
C) $110,000. 
D) $100,000. 
E) Cannot be determined from the information given. 
A) $30,000. 
B) $140,000. 
C) $110,000. 
D) $100,000. 
E) Cannot be determined from the information given.

Question 14

The contribution by profit center (CPU) expands the contribution margin income statement by distinguishing:

Accepted Answer

A)  Variable and fixed costs. 
B)  Short-term and long-term fixed costs. 
C)  Controllable and noncontrollable fixed costs. 
D)  Noncontrollable and untraceable fixed costs. 
E)  Controllable, noncontrollable, and untraceable fixed costs. 
A)  Variable and fixed costs. 
B)  Short-term and long-term fixed costs. 
C)  Controllable and noncontrollable fixed costs. 
D)  Noncontrollable and untraceable fixed costs. 
E)  Controllable, noncontrollable, and untraceable fixed costs.

Question 15

Which of the following is not a step to maximize the value of nonfinancial measures, as suggested by Ittner and Larcker?

Accepted Answer

A)  Benchmark with similar firms. 
B)  Base actions on findings. 
C)  Develop a causal model. 
D)  Assess outcomes. 
A)  Benchmark with similar firms. 
B)  Base actions on findings. 
C)  Develop a causal model. 
D)  Assess outcomes.

Question 16

Todweed Academy allocates marketing and administrative costs to its three schools based on total annual tuition revenue for the schools:$\begin{array}{ccccc} 
& \text { Lower } & \text { Middle } & \text { Upper } \
{\text { School }} & \text { School } & \text { School } & \text { School } & \text { Total } \
\text { Tuition revenue } & \$ 1,000,000 & \$ 800,000 & \$ 1,200,000 & \$ 3,000,000\\text { Marketing and }\
\text { administrative }&&&&\$1,200,000
\end{array}$Using revenue as an allocation base, the amount of costs allocated to the Upper School is calculated to be:

Accepted Answer

A)  $240,000. 
B)  $360,000. 
C)  $400,000. 
D)  $480,000. 
E)  $600,000. 
A)  $240,000. 
B)  $360,000. 
C)  $400,000. 
D)  $480,000. 
E)  $600,000.

Question 17

Organic Laboratories allocates research and development costs to its three research facilities based on each facility's total annual revenue from new product developments:$\begin{array}{ll}
\text { Facility location }&\text { Kentucky }&\text { Arizona }&\text { Illinois }&\text { Total }\
\text { New product }\
\text { revenue }&\$56,000,000&\$100,000,000&\$84,000,000&\$240,000,000\
\text { Research \& }\
(\text { Development }&&&&\$60,000,000\
\end{array}$
Using revenue as an allocation base, the amount of costs allocated to the Illinois research facility is calculated to be:

Accepted Answer

A)  $17,000,000. 
B)  $33,000,000. 
C)  $14,000,000. 
D)  $28,000,000. 
E)  $21,000,000. 
A)  $17,000,000. 
B)  $33,000,000. 
C)  $14,000,000. 
D)  $28,000,000. 
E)  $21,000,000.

Question 18

A strategic business unit (SBU) consists of a well-defined set of controllable operating activities over/about which the SBU manager is:

Accepted Answer

A)  Knowledgeable. 
B)  Responsible for strategy. 
C)  Responsible for strategy and execution. 
D)  Responsible for strategy, execution, and performance. 
A)  Knowledgeable. 
B)  Responsible for strategy. 
C)  Responsible for strategy and execution. 
D)  Responsible for strategy, execution, and performance.

Question 19

In properly developing formal systems at the team level that will have the desired impact on employees' performance, the management accountant should recognize any existing informal systems and:

Accepted Answer

A)  Make plans to eliminate these informal systems. 
B)  Simply formalize them into the system being developed. 
C)  Try to eliminate them prior to system development. 
D)  Not let cultural aspects affect system development. 
E)  Consider cultural aspects in development of the formal system. 
A)  Make plans to eliminate these informal systems. 
B)  Simply formalize them into the system being developed. 
C)  Try to eliminate them prior to system development. 
D)  Not let cultural aspects affect system development. 
E)  Consider cultural aspects in development of the formal system.

Question 20

Quick Technology Company is a supplier of high-end research equipment for the pharmaceutical industry. Quick currently has a variety of different firms producing computer chips for increased memory and improved processing speeds which are installed in Quick's equipment. In this case, having another firm provide supplies for Quick's equipment is an example of:

Accepted Answer

A)  Strategic positioning. 
B)  Opportunity costing. 
C)  Profitability maximization. 
D)  Outsourcing. 
E)  Value chain analysis. 
A)  Strategic positioning. 
B)  Opportunity costing. 
C)  Profitability maximization. 
D)  Outsourcing. 
E)  Value chain analysis.

Which of the following is not a characteristic of the discretionary-cost approach?

Lawson Company had the following manufacturing information for the current year. Assume the same per unit costs occurred in the prior year.Required: Determine operating income under both full costing and variable costing and explain the difference.

The most important objective of a strategic performance measurement system is:

The principal-agent economic model applied to employment contracts includes two of the following management performance aspects:

For production and support departments, a method of implementing cost centers that is input-oriented is the:

Strategic performance measurement is a(n):

Among the benefits of centralized management in a firm is(are):

SBUs that generate revenues and incur the major portion of the cost for producing those revenues are:

Companies use the balanced scorecard to describe strategy in detail through the use of a cause-and-effect diagram which is also known as a(n):

The contribution by profit center (CPU) expands the contribution margin income statement by distinguishing:

Which of the following is not a step to maximize the value of nonfinancial measures, as suggested by Ittner and Larcker?

A strategic business unit (SBU) consists of a well-defined set of controllable operating activities over/about which the SBU manager is:

In properly developing formal systems at the team level that will have the desired impact on employees' performance, the management accountant should recognize any existing informal systems and:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 18: Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Which of the following is not a characteristic of the discretionary-cost approach?

Lawson Company had the following manufacturing information for the current year. Assume the same per unit costs occurred in the prior year.Required: Determine operating income under both full costing and variable costing and explain the difference.

The most important objective of a strategic performance measurement system is:

The principal-agent economic model applied to employment contracts includes two of the following management performance aspects:

For production and support departments, a method of implementing cost centers that is input-oriented is the:

Strategic performance measurement is a(n):

Among the benefits of centralized management in a firm is(are):

SBUs that generate revenues and incur the major portion of the cost for producing those revenues are:

Companies use the balanced scorecard to describe strategy in detail through the use of a cause-and-effect diagram which is also known as a(n):

The contribution by profit center (CPU) expands the contribution margin income statement by distinguishing:

Which of the following is not a step to maximize the value of nonfinancial measures, as suggested by Ittner and Larcker?

A strategic business unit (SBU) consists of a well-defined set of controllable operating activities over/about which the SBU manager is:

In properly developing formal systems at the team level that will have the desired impact on employees' performance, the management accountant should recognize any existing informal systems and:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters