Question 1

An example of an ordering cost is:

Accepted Answer

A)  security. 
B)  time spent finding suppliers. 
C)  idle workers. 
D)  costs of disrupted production. 
A)  security. 
B)  time spent finding suppliers. 
C)  idle workers. 
D)  costs of disrupted production. B

Question 2

Identify and define the five core customer measures. To support your answer, provide an example for each core measure.

Accepted Answer

The five core customer measures are customer satisfaction, customer loyalty, customer retention, customer advocacy, and customer lifetime value.

1. Customer satisfaction: This measures how satisfied a customer is with a product or service. For example, a customer satisfaction survey can be used to measure the level of satisfaction a customer has with a recent purchase.

2. Customer loyalty: This measures the likelihood of a customer to continue purchasing from a specific brand or company. For example, a customer who consistently chooses a particular airline for their travels demonstrates loyalty to that airline.

3. Customer retention: This measures the ability of a company to retain its customers over time. For example, a high customer retention rate indicates that a company is successful in keeping its customers coming back for repeat purchases.

4. Customer advocacy: This measures the likelihood of a customer to recommend a product or service to others. For example, a customer who actively promotes a specific brand or product to their friends and family is a strong advocate for that brand.

5. Customer lifetime value: This measures the total value a customer brings to a company over the entire duration of their relationship. For example, a customer who consistently makes large purchases and remains loyal to a company for many years has a high customer lifetime value.

Question 3

The following dates apply to a specific order processed by Hamilton Ltd:  
What is the customer response time?

Accepted Answer

A)  21 days 
B)  7 days 
C)  10 days 
D)  13 days 
A)  21 days 
B)  7 days 
C)  10 days 
D)  13 days A

Question 4

The advantage of a just-in-time (JIT) system is that there are huge savings in costs relating to the holding of inventory as JIT companies never hold inventories of any description.

Accepted Answer

A) True 
 B)False

Question 5

The reason a just-in-time system focuses on the control of inventories is because:

Accepted Answer

A)  they drive production lead times. 
B)  they are an expensive capital item for most firms. 
C)  they are what customers want. 
D)  they have non-value-added characteristics. 
A)  they drive production lead times. 
B)  they are an expensive capital item for most firms. 
C)  they are what customers want. 
D)  they have non-value-added characteristics.

Question 6

Under a backflush costing system, conversion costs are:

Accepted Answer

A)  applied to finished goods inventory. 
B)  applied to manufacturing overhead only. 
C)  applied directly to cost of goods sold. 
D)  applied to finished goods inventory OR applied directly to cost of goods sold. 
A)  applied to finished goods inventory. 
B)  applied to manufacturing overhead only. 
C)  applied directly to cost of goods sold. 
D)  applied to finished goods inventory OR applied directly to cost of goods sold.

Question 7

Which of the following statements is/are correct?
i. The economic order quantity determines the optimum order size for individual inventory items.
ii. The economic order quantity cannot be used in a manufacturing organisation.
iii. The economic order quantity minimises the sum of the ordering and carrying costs.

Accepted Answer

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

Question 8

The Wonderlust Retail Company Ltd experiences relatively constant demand of 24 000 units per year for one of its products. The product, a coffee-making machine, costs the firm $30. Placing an order costs $200 and annual carrying costs are $2 per unit. The firm works 200 days per year and desires a safety stock of 300 units. The lead time for an order is 15 working days. The economic order quantity for Wonderlust is:

Accepted Answer

A)  1549. 
B)  3098. 
C)  2191. 
D)  2221. 
A)  1549. 
B)  3098. 
C)  2191. 
D)  2221.

Question 9

Customer value is an important part of activity-based management and it enables an organisation to achieve both cost reduction and improved customer value through the use of which of the following?
i. Identifying major opportunities for cost reduction.
ii. Determining root causes of these costs.
iii. Developing programs to eliminate the causes of these costs.
iv. Introducing performance measures to monitor the effect of these programs.

Accepted Answer

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

Question 10

Strategic alliances are informal arrangements between two or more suppliers and customers relating to the supply of raw materials.

Accepted Answer

A) True 
 B)False

Question 11

Organisations usually undertake a formal process to determine their preferred suppliers.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements regarding the pull method is/are true?
i. Goods are produced in each manufacturing stage only as they are needed at the next stage.
ii. This method reduces work-in-process inventory.
iii. This method reduces inventory handling and its associated non-value-added cost.

Accepted Answer

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

Question 13

Under a backflush costing system, the journal entry to purchase raw materials on account is:

Accepted Answer

A)  debit work in process and credit accounts payable. 
B)  debit raw materials and credit cash. 
C)  debit raw and in-process inventory and credit accounts payable. 
D)  debit cost of goods sold and credit accounts payable. 
A)  debit work in process and credit accounts payable. 
B)  debit raw materials and credit cash. 
C)  debit raw and in-process inventory and credit accounts payable. 
D)  debit cost of goods sold and credit accounts payable.

Question 14

If the total supplier activity costs were $74 000; price per unit was $1.70; and total units purchased were 12 000, the supplier performance index would be:

Accepted Answer

A)  6.166. 
B)  10.483. 
C)  5.223. 
D)  3.627. 
A)  6.166. 
B)  10.483. 
C)  5.223. 
D)  3.627.

Question 15

Select the statement that best completes the following sentence for all possible scenarios: 'Considering the entire value chain is important for management accounting in today's competitive environment because ....'

Accepted Answer

A)  the value chain actually extends back to suppliers and forward to customers. 
B)  production is only one very small part of the value chain. 
C)  traditional systems have focused on the engineered costs of production rather than the discretionary costs of the other aspects of the value chain. 
D)  the study of all aspects and linkages in the chain may provide opportunities for cost reduction that are not evident when focusing on one aspect only. 
A)  the value chain actually extends back to suppliers and forward to customers. 
B)  production is only one very small part of the value chain. 
C)  traditional systems have focused on the engineered costs of production rather than the discretionary costs of the other aspects of the value chain. 
D)  the study of all aspects and linkages in the chain may provide opportunities for cost reduction that are not evident when focusing on one aspect only.

Question 16

Which of the following is a likely cause for a longer-than-expected production lead time?

Accepted Answer

A)  The order was received later than expected. 
B)  The delivery truck has broken down on the way to the customer. 
C)  The order was lost after the customer sent it to the company. 
D)  There was excessive idle time in the production process. 
A)  The order was received later than expected. 
B)  The delivery truck has broken down on the way to the customer. 
C)  The order was lost after the customer sent it to the company. 
D)  There was excessive idle time in the production process.

Question 17

GoGo Furniture has collected the following customer-related information:  
The total order level cost is:

Accepted Answer

A)  $6000 
B)  $16 000 
C)  $24 500 
D)  $29 000 
A)  $6000 
B)  $16 000 
C)  $24 500 
D)  $29 000

Question 18

Which of the following are customer costs at the customer level?
i. Regular sales calls
ii. Customer inquiries
iii. Acceptance of sales order
iv. Provision of samples to customers

Accepted Answer

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

Question 19

GoGo Furniture needs to purchase glass panes to make glass top coffee tables. Last year GoGo Furniture has two suppliers, BolBol and TolTol. Based on last year's experience with these two suppliers, GoGo provides you with the following supplier related information:  
The total costs of ownership of BolBol and TolTol are, respectively:

Accepted Answer

A)  BolBol $10 050; TolTol $4050 
B)  BolBol $15 050; TolTol $6050 
C)  BolBol $50 300; TolTol $120 600 
D)  BolBol $65 050; TolTol $126 050 
A)  BolBol $10 050; TolTol $4050 
B)  BolBol $15 050; TolTol $6050 
C)  BolBol $50 300; TolTol $120 600 
D)  BolBol $65 050; TolTol $126 050

Question 20

The reorder point is calculated by:

Accepted Answer

A)  average usage $\times$ safety stock + lead time. 
B)  average usage $\times$ safety stock $\times$ lead time. 
C)  average usage $\times$ lead time + safety stock. 
D)  safety stock $\times$ lead time + average usage. 
A)  average usage $\times$ safety stock + lead time. 
B)  average usage $\times$ safety stock $\times$ lead time. 
C)  average usage $\times$ lead time + safety stock. 
D)  safety stock $\times$ lead time + average usage.

An example of an ordering cost is:

Identify and define the five core customer measures. To support your answer, provide an example for each core measure.

The following dates apply to a specific order processed by Hamilton Ltd: What is the customer response time?

The advantage of a just-in-time (JIT) system is that there are huge savings in costs relating to the holding of inventory as JIT companies never hold inventories of any description.

The reason a just-in-time system focuses on the control of inventories is because:

Under a backflush costing system, conversion costs are:

Strategic alliances are informal arrangements between two or more suppliers and customers relating to the supply of raw materials.

Organisations usually undertake a formal process to determine their preferred suppliers.

Under a backflush costing system, the journal entry to purchase raw materials on account is:

If the total supplier activity costs were $74 000; price per unit was $1.70; and total units purchased were 12 000, the supplier performance index would be:

Select the statement that best completes the following sentence for all possible scenarios: 'Considering the entire value chain is important for management accounting in today's competitive environment because ....'

Which of the following is a likely cause for a longer-than-expected production lead time?

GoGo Furniture has collected the following customer-related information: The total order level cost is:

Which of the following are customer costs at the customer level? i. Regular sales calls ii. Customer inquiries iii. Acceptance of sales order iv. Provision of samples to customers

The reorder point is calculated by:

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 Costs and Quality

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 15: Managing Suppliers and Customers

An example of an ordering cost is:

Identify and define the five core customer measures. To support your answer, provide an example for each core measure.

The following dates apply to a specific order processed by Hamilton Ltd: What is the customer response time?

The advantage of a just-in-time (JIT) system is that there are huge savings in costs relating to the holding of inventory as JIT companies never hold inventories of any description.

The reason a just-in-time system focuses on the control of inventories is because:

Under a backflush costing system, conversion costs are:

Strategic alliances are informal arrangements between two or more suppliers and customers relating to the supply of raw materials.

Organisations usually undertake a formal process to determine their preferred suppliers.

Under a backflush costing system, the journal entry to purchase raw materials on account is:

If the total supplier activity costs were $74 000; price per unit was $1.70; and total units purchased were 12 000, the supplier performance index would be:

Select the statement that best completes the following sentence for all possible scenarios: 'Considering the entire value chain is important for management accounting in today's competitive environment because ....'

Which of the following is a likely cause for a longer-than-expected production lead time?

GoGo Furniture has collected the following customer-related information: The total order level cost is:

Which of the following are customer costs at the customer level? i. Regular sales calls ii. Customer inquiries iii. Acceptance of sales order iv. Provision of samples to customers

The reorder point is calculated by:

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 Costs and Quality

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