Exam 1: Cost Accounting: Information for Decision Making

Al's Brake Shop had sales revenues and operating costs in 2014 of $650,000 and $525,000,respectively.In 2015,Al's plans to expand the services it provides to customers to include lubrication 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 brake business,what is the amount of operating profits that are expected be earned in 2015?

The Sarbanes Oxley Act of 2002 requires an effective internal control system for publicly owned firms.Therefore,with regards to strategic investment decisions,it is important that management consider including

Continual process of measuring a company's own products,services or activities against competitors' performance is

The financial plan of the revenues and resources needed to carry out activities and meet financial goals is called

The system that identifies the costs of producing low-quality items is called

A cost can be considered a differential cost for one particular course of action but not for another course of action.A differential cost is a cost that changes in response to a particular course of action.A cost may change in response to one course of action but not in response to a different course of action.

It is important that the manager assigned to lead a responsibility center be held accountable for its operations.Responsibility does not work without accountability.

A value chain consists of the major subassemblies that add value to a product.A value chain is a set of activities that transforms raw resources into the goods and services end users purchase and consume.

Administrative functions are not included as part of the value chain because they are implicitly included in every business function.Administrative expenses are not included as part of the value chain because they are included instead in every business function of the value chain.

Which area(s)of a business can be improved by using a just-in-time (JIT)system?

It is more important for financial accounting information to be comparable between firms than to be useful for managerial decision-making.Important criteria for financial accounting include comparability and decision relevance;decision relevance and timeliness are the important criteria for cost accounting.

The costing method that first assigns costs to activities and then assigns them to products based on the products' consumption of activities is called

An Enterprise Resource Planning System can best be described as

All of the following are examples of total quality management practices except

Cost accounting provides information only for cost accounting purposes.Although it is designed for decision makers,cost accounting is commonly used in financial accounting information.

With the enactment of the Sarbanes-Oxley Act of 2002,all public companies are now required by the SEC to disclose whether or not the company has

A responsibility center can be a department,division,or segment,but not a subsidiary of the parent company.This statement is false.A responsibility center is a specific unit of an organization assigned to a manager who is held accountable for its operations and resources.As such,a department,division,segment,or subsidiary could be considered a responsibility center.

Which of the following is not a key financial manager in an organization?

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

Where there is a lack of good performance measures,it is difficult to motivate managers by using