Exam 1: Cost Accounting: Information for Decision Making

In 2016,the Allen Company had consulting revenues of $1,000,000 while operating costs were $750,000.In 2017,Allen will be introducing a new service that will generate $150,000 in sales revenues and $60,000 in operating costs.Assuming no changes are expected for the other services,the differential operating costs for 2017 will be

Managers do not make decisions about future events based on:

Cost information itself is a product with its own customers.

Marcus Roberts is putting together a training session about value chain components.Which of the following would be a good example of a cost for the component of purchasing?

All of the following actions enhance the new focus on making cost accounting information more relevant in helping a firm achieve strategic goals except:

Cost accounting information is commonly used in developing financial accounting information.

Which of the following statements concerning the value chain is false?

A cost can be considered a differential cost for one particular course of action but not for another course of action.

The manager of a profit center of a large electronics manufacturing corporation made some projections regarding sales and profits for the upcoming final quarter of the year.The managers' performance evaluation and compensation depended significantly on his ability to meet budget goals.The manager discovered that the final quarter would have to be a particularly good quarter in order to meet these goals.He decided to implement a sales program offering liberal payment terms in order to pull some sales that would normally occur next year into the current year.Customers accepting delivery in the fourth quarter would not have to pay the invoice for 140 days.Also,he sold some equipment that was not being used and realized a significant profit on the sale. Are these actions ethical? Why or why not?

All of the following words describe benchmarking except:

Clancy Mining Company mines iron ore for production into various metal products.During recent years,the company had large fluctuations in its inventories of metal ingots.Much of the volatility of the inventory levels is due to the variability of demand by the company's largest customers,automobile manufacturers.For large orders,the company has the technology to quickly shift production from one product to another.Explain how the company can improve its inventory control system and give the advantages of whatever you recommend.

The Institute of Management Accountants' (IMA)standards of ethical conduct for management accountants includes the elements of

Lean manufacturing techniques are used only in the production process.

Information technology that links the various processes of the company into a single comprehensive information system is called

The concept of considering both the costs and benefits of a proposal is known as:

Which of the following is a true statement regarding performance evaluation?

Geno's Body Shop had sales revenues and operating costs in 2016 of $650,000 and $525,000,respectively.In 2017,Geno's plans to expand the services it provides to customers to include detailing services.Revenues are expected to increase by $85,000 and operating costs by $50,000 as a result of this expansion.Assuming that there are no changes to the existing body shop business,what is the amount of operating profits that are expected be earned in 2017?

Accounting systems are important because they are a primary source of information for managers.

Place the letter of the appropriate element of an organization's value chain in Column 2 in the blank next to each operation in Column 1.

Which of the following is notnormally considered part of the value chain?