Question 1

Which of the following statements best describes performance measurement in line with continuous improvement?

Accepted Answer

A)  Firms select relevant performance measures. 
B)  The measure will keep changing over time. 
C)  The measure will keep improving over time. 
D)  The firm targets an area to improve, moving the target until the desired outcome is achieved. The firm is then likely to target another area for improvement. 
A)  Firms select relevant performance measures. 
B)  The measure will keep changing over time. 
C)  The measure will keep improving over time. 
D)  The firm targets an area to improve, moving the target until the desired outcome is achieved. The firm is then likely to target another area for improvement.

Question 2

Assume a production process that typically moves the following number of products through its five processes:  
Assuming there is room for improvement in all processes, in what order of processes would the firm apply the theory of constraints to remove the bottlenecks?

Accepted Answer

A)  4 first, and then any order 
B)  2, 1, 3, 5, 4 
C)  Work must be carried out in order of the physical flow of activities, i.e. 1, 2, 3, 4, 5 
D)  4, 5, 3, 1, 2 
A)  4 first, and then any order 
B)  2, 1, 3, 5, 4 
C)  Work must be carried out in order of the physical flow of activities, i.e. 1, 2, 3, 4, 5 
D)  4, 5, 3, 1, 2

Question 3

Lazy Linda Kitchen Appliances has just begun the development of a new energy-saving, voice-activated toaster. The accountant, Linda Rest, is preparing a life cycle budget. Which of the following costs should be included?
i. The salaries of the designers dedicated to the design of the new toaster.
ii. The committed costs associated with the acquisition of a new machine that manufacturers the voice recognition component of the toaster.
iii. The cost of producing the new toasters.
iv. The costs associated with establishing a distribution network for the new product.

Accepted Answer

A)  i, ii and iii 
B)  i, iii and iv 
C)  ii and iii 
D)  All of these costs should be included. 
A)  i, ii and iii 
B)  i, iii and iv 
C)  ii and iii 
D)  All of these costs should be included.

Question 4

Beaufort Ltd is introducing a new range of products. It has established that the target selling prices of the three products are $120, $150 and $210. Beaufort requires a profit mark-up on cost of 33.3 per cent for all its products. What percentage of the target prices is the target cost in each case?

Accepted Answer

A)  50% 
B)  60% 
C)  66.7% 
D)  75% 
A)  50% 
B)  60% 
C)  66.7% 
D)  75%

Question 5

Assuming one answer only can be chosen, which of the following is a non-value-added activity for a manufacturing firm?

Accepted Answer

A)  Machining a metal plate in the factory. 
B)  Packing finished product into cartons for delivery. 
C)  Moving partly finished production to storage. 
D)  Inserting a warranty-card and instruction booklet into the boxed product. 
A)  Machining a metal plate in the factory. 
B)  Packing finished product into cartons for delivery. 
C)  Moving partly finished production to storage. 
D)  Inserting a warranty-card and instruction booklet into the boxed product.

Question 6

In order to have a high-quality finished product:

Accepted Answer

A)  appraisal costs must exceed external failure costs. 
B)  the product's design specifications must meet customers' expectations. 
C)  the product must meet the standards of its design. 
D)  the product's design specifications must meet customers' expectations AND the product must meet the standards of its design. 
A)  appraisal costs must exceed external failure costs. 
B)  the product's design specifications must meet customers' expectations. 
C)  the product must meet the standards of its design. 
D)  the product's design specifications must meet customers' expectations AND the product must meet the standards of its design.

Question 7

External failure costs refer to costs incurred:

Accepted Answer

A)  in preventing defects. 
B)  in determining whether defects exist. 
C)  because defective products or services are delivered to customers. 
D)  when defective products or services are detected before leaving the business. 
A)  in preventing defects. 
B)  in determining whether defects exist. 
C)  because defective products or services are delivered to customers. 
D)  when defective products or services are detected before leaving the business.

Question 8

Quality costs―failure, prevention and appraisal―can be graphed to determine the acceptable quality level of a firm.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements about throughput accounting is false?

Accepted Answer

A)  Throughput accounting is criticised for having a short-term focus. 
B)  Under throughput accounting, operating expenses are not relevant. 
C)  Throughput accounting measures the financial effects of bottlenecks. 
D)  Under throughput accounting, inventory is considered undesirable.. 
A)  Throughput accounting is criticised for having a short-term focus. 
B)  Under throughput accounting, operating expenses are not relevant. 
C)  Throughput accounting measures the financial effects of bottlenecks. 
D)  Under throughput accounting, inventory is considered undesirable..

Question 10

Throughput accounting uses which of the following measures of the effects of bottlenecks?
i. Financial measures of inventory
ii. Financial measures of throughput
iii. Non-financial measures of throughput
iv. Operating expenses

Accepted Answer

A)  i, ii and iii 
B)  ii, iii and iv 
C)  i, iii and iv 
D)  i, ii and iv 
A)  i, ii and iii 
B)  ii, iii and iv 
C)  i, iii and iv 
D)  i, ii and iv

Question 11

The following steps are required to implement business process re-engineering.
i. Establish goals
ii. Reorganise work flow
iii. Prepare a business process map
iv. Implementation
What is the correct order for these steps?

Accepted Answer

A)  i, ii, iii and iv 
B)  i, iii, ii and iv 
C)  iii, i, ii and iv 
D)  ii, iii, i and iv 
A)  i, ii, iii and iv 
B)  i, iii, ii and iv 
C)  iii, i, ii and iv 
D)  ii, iii, i and iv

Question 12

Business process re-engineering is a radical approach to managing costs that involves a complete rethink of the processes undertaken, to achieve major improvements in cost and quality.

Accepted Answer

A) True 
 B)False

Question 13

Activity-based management uses information from process costing to analyse activities, cost drivers and performance that lead to improved customer value and profitability.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is/are false?
i. Determining the cause of non-value-added activities requires cost driver analysis.
ii. Building activities into processes will quickly identify the causes of non-value-added activities.
iii. Identifying root cause cost drivers is sufficient to enable non-value-added activities to be eliminated.

Accepted Answer

A)  i and ii 
B)  ii and iii 
C)  i and iii 
D)  All of the given answers 
A)  i and ii 
B)  ii and iii 
C)  i and iii 
D)  All of the given answers

Question 15

Cartel Ltd has introduced a new product with a target price of $240 and a profit requirement of 33.3 per cent on sales. What is the target cost?

Accepted Answer

A)  $120 
B)  $160 
C)  $180 
D)  $200 
A)  $120 
B)  $160 
C)  $180 
D)  $200

Question 16

From the following list of costs for a kitchen manufacturer, determine the amount of value-added cost.

Accepted Answer

A)  $57 000 
B)  $54 000 
C)  $58 000 
D)  $59 000 
A)  $57 000 
B)  $54 000 
C)  $58 000 
D)  $59 000

Question 17

From a customer perspective, a value-added cost is one:

Accepted Answer

A)  which increases the value of the product to the customer. 
B)  which the firm has determined is essential in the production of the product. 
C)  on which the firm must focus. 
D)  which increases the value of the product to the customer and the customer is prepared to pay for the added value. 
A)  which increases the value of the product to the customer. 
B)  which the firm has determined is essential in the production of the product. 
C)  on which the firm must focus. 
D)  which increases the value of the product to the customer and the customer is prepared to pay for the added value.

Question 18

A systematic approach in analysing the product and process design, with the aim of eliminating any non-value-added elements, to achieve the target cost is known as:

Accepted Answer

A)  component level target costs. 
B)  value engineering. 
C)  strategic cost reduction. 
D)  cost reduction objective. 
A)  component level target costs. 
B)  value engineering. 
C)  strategic cost reduction. 
D)  cost reduction objective.

Question 19

Which of the following statements is/are false?

Accepted Answer

A)  Cost of quality reports analyse quality costs as a percentage of total sales. 
B)  An increase in quality costs indicates deterioration in quality performance. 
C)  There can be interactions between the quality costs. 
D)  The traditional view of quality costs is that total quality costs can be minimised by driving the defect rate down to the acceptable quality level. 
A)  Cost of quality reports analyse quality costs as a percentage of total sales. 
B)  An increase in quality costs indicates deterioration in quality performance. 
C)  There can be interactions between the quality costs. 
D)  The traditional view of quality costs is that total quality costs can be minimised by driving the defect rate down to the acceptable quality level.

Question 20

Three processes are involved in the manufacturing of Product X. First, the components go through the Machining Process, then the Assembling Process, and finally the Packaging Process. The hourly production capacity of the three processes is 500 units, 600 units and 800 units respectively. How many units of Product X can be produced in one hour?

Accepted Answer

A)  500 units 
B)  600 units 
C)  800 units 
D)  633 units 
A)  500 units 
B)  600 units 
C)  800 units 
D)  633 units

Which of the following statements best describes performance measurement in line with continuous improvement?

Assume a production process that typically moves the following number of products through its five processes: Assuming there is room for improvement in all processes, in what order of processes would the firm apply the theory of constraints to remove the bottlenecks?

Assuming one answer only can be chosen, which of the following is a non-value-added activity for a manufacturing firm?

In order to have a high-quality finished product:

External failure costs refer to costs incurred:

Quality costs―failure, prevention and appraisal―can be graphed to determine the acceptable quality level of a firm.

Which of the following statements about throughput accounting is false?

Throughput accounting uses which of the following measures of the effects of bottlenecks? i. Financial measures of inventory ii. Financial measures of throughput iii. Non-financial measures of throughput iv. Operating expenses

The following steps are required to implement business process re-engineering. i. Establish goals ii. Reorganise work flow iii. Prepare a business process map iv. Implementation What is the correct order for these steps?

Business process re-engineering is a radical approach to managing costs that involves a complete rethink of the processes undertaken, to achieve major improvements in cost and quality.

Activity-based management uses information from process costing to analyse activities, cost drivers and performance that lead to improved customer value and profitability.

Cartel Ltd has introduced a new product with a target price of $240 and a profit requirement of 33.3 per cent on sales. What is the target cost?

From the following list of costs for a kitchen manufacturer, determine the amount of value-added cost.

From a customer perspective, a value-added cost is one:

A systematic approach in analysing the product and process design, with the aim of eliminating any non-value-added elements, to achieve the target cost is known as:

Which of the following statements is/are false?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

Exam 16: Managing Costs and Quality

Which of the following statements best describes performance measurement in line with continuous improvement?

Assume a production process that typically moves the following number of products through its five processes: Assuming there is room for improvement in all processes, in what order of processes would the firm apply the theory of constraints to remove the bottlenecks?

Assuming one answer only can be chosen, which of the following is a non-value-added activity for a manufacturing firm?

In order to have a high-quality finished product:

External failure costs refer to costs incurred:

Quality costs―failure, prevention and appraisal―can be graphed to determine the acceptable quality level of a firm.

Which of the following statements about throughput accounting is false?

Throughput accounting uses which of the following measures of the effects of bottlenecks? i. Financial measures of inventory ii. Financial measures of throughput iii. Non-financial measures of throughput iv. Operating expenses

The following steps are required to implement business process re-engineering. i. Establish goals ii. Reorganise work flow iii. Prepare a business process map iv. Implementation What is the correct order for these steps?

Business process re-engineering is a radical approach to managing costs that involves a complete rethink of the processes undertaken, to achieve major improvements in cost and quality.

Activity-based management uses information from process costing to analyse activities, cost drivers and performance that lead to improved customer value and profitability.

Cartel Ltd has introduced a new product with a target price of $240 and a profit requirement of 33.3 per cent on sales. What is the target cost?

From the following list of costs for a kitchen manufacturer, determine the amount of value-added cost.

From a customer perspective, a value-added cost is one:

A systematic approach in analysing the product and process design, with the aim of eliminating any non-value-added elements, to achieve the target cost is known as:

Which of the following statements is/are false?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters