Question 1

The cost leadership strategy is best for a company if the engineering staff is more skilled at creatively designing new products than at making process improvements.

Accepted Answer

A) True 
 B)False

Question 2

re-engineering benefits are most significant when they focus on one business function rather than crossing functional lines of the business process.

Accepted Answer

A) True 
 B)False

Question 3

The revenue effect of price recovery is calculated by multiplying the difference in selling price (current year minus the previous year) by ________.

Accepted Answer

A)  actual units sold in the current year 
B)  budgeted units sold in the previous year 
C)  budgeted units sold in the current year 
D)  actual units sold in the previous year

Question 4

Strategic Analysis of Profitability of King Philip Company:

What is the cost effect of the productivity component (c)?

Accepted Answer

A)  $0 
B)  $1400 U 
C)  $300 F 
D)  $2600 F

Question 5

Successful re-engineering efforts generally involve changing the roles and responsibilities of employees.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is a possible pitfall while implementing a balanced scorecard?

Accepted Answer

A)  Managers using cost-benefit considerations while designing a balanced scorecard. 
B)  Managers ignoring objective measures as market share, manufacturing yield. 
C)  Managers using subjective measures in the balanced scorecard. 
D)  Top management ignoring nonfinancial measures when evaluating employee performance.

Question 7

________ is an example of a total factor productivity measure.

Accepted Answer

A)  The number of units produced per month 
B)  The number of units produced per machine hour 
C)  The number of units produced per labor hour 
D)  The number of units produced per dollar of input cost

Question 8

Strategic Analysis of Profitability of King Philip Company:

What is the cost effect of the growth component (a)?

Accepted Answer

A)  $9500 F 
B)  $4500 U 
C)  $9500 U 
D)  $4500 F

Question 9

Productivity describes the relationship between different quantities of inputs consumed and the quantities of output produced.

Accepted Answer

A) True 
 B)False

Question 10

Assuming previous year's production capacity was adequate to produce current year output, the cost effect of growth for fixed costs is calculated by multiplying the difference between ________ by price per unit of capacity in the previous year.

Accepted Answer

A)  actual units of capacity in current year and actual units of capacity in previous year 
B)  capacity units required to produce current year output in previous year and the current year capacity units 
C)  actual units of capacity in previous year and actual units of capacity in previous year 
D)  capacity units required to produce previous year output in current year and the previous year capacity units

Question 11

Which of the following statements is true of a balanced scorecard?

Accepted Answer

A)  The balanced scorecard reduces managers' emphasis on long-run financial performance. 
B)  The balanced scorecard reduces managers' emphasis on short-run financial performance. 
C)  The primary goal of using the balanced scorecard is to sustain short-run financial performance. 
D)  The primary goal of using the balanced scorecard is to sustain short-run nonfinancial performance.

Question 12

Trusted Products Company makes a household appliance with model number L800. The goal for 2018 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of L800 units that can be produced. The industry market size for appliances increased 15% from 2017 to 2018. The following additional data are available for 2017 and 2018:

What is the revenue effect of the growth component?

Accepted Answer

A)  $1,782,000 U 
B)  $418,500 F 
C)  $418,500 U 
D)  $1,782,000 F

Question 13

Following a strategy of product differentiation, Izzy's Limited Company makes a high-end Appliance, XT15. Izzy's Limited presents the following data for the years 2017 and 2018:

Izzy's Limited produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Izzy's Limited had 175 customers in 2017 and 180 customers in 2018.
What is the revenue effect of the growth component?

Accepted Answer

A)  $3,780,000 F 
B)  $1,200,000 U 
C)  $3,780,000 U 
D)  $1,200,000 F

Question 14

Following a strategy of product differentiation, Izzy's Limited Company makes a high-end Appliance, XT15. Izzy's Limited presents the following data for the years 2017 and 2018:

Izzy's Limited produces no defective units but it wants to reduce direct materials usage per unit of XT15. Manufacturing conversion costs in each year depend on production capacity defined in terms of XT15 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Izzy's Limited had 140 customers in 2017 and 145 customers in 2018.
What is operating income in 2018?

Accepted Answer

A)  $7,463,500 
B)  $15,841,900 
C)  $9,212,000 
D)  $15,921,775

Question 15

Following a strategy of product differentiation, Somerset Corporation makes a high-end computer monitor, CM7. Somerset Corporation presents the following data for the years 2017 and 2018:
  
Somerset Corporation produces no defective units but it wants to reduce direct materials usage per unit of CM7 in 2018. Manufacturing conversion costs in each year depend on production capacity defined in terms of CM7 units that can be produced. Selling and customer-service costs depend on the number of customers that the customer and service functions are designed to support. Somerset Corporation has 100 customers in 2017 and 115 customers in 2018. The industry market size for high-end computer monitors increased 5% from 2017 to 2018.
Required:
a.What is operating income for 2017?
b.What is operating income in 2018?
c.What is the change in operating income from 2017 to 2018?

Accepted Answer

The answer of Following a strategy of product differentiation, Somerset...

Question 16

Partial productivity and total factor productivity measures work best together because both measures have the same kind of strengths and weaknesses.

Accepted Answer

A) True 
 B)False

Question 17

Stewart Corporation plans to grow by offering a sound system, the SS3000, that is superior and unique from the competition. Stewart believes that putting additional resources into R&D and staying ahead of the competition with technological innovations is critical to implementing its strategy. To further company strategy, measures on the balanced scorecard would most likely include ________.

Accepted Answer

A)  number of process improvements 
B)  manufacturing quality 
C)  yield 
D)  an increase in operating income from productivity gains

Question 18

Which of the following focuses on these five factors: competitors, potential entrants to the market, equivalent products, bargaining power of customers, and bargaining power of suppliers?

Accepted Answer

A)  balanced scorecard 
B)  product differentiation analysis 
C)  industry analysis 
D)  business process reengineering

Question 19

identifying unused capacity for R&D costs is relatively easy once the impact of downsizing is estimated for engineered costs.

Accepted Answer

A) True 
 B)False

Question 20

Cost effect of productivity for fixed costs is calculated by multiplying the difference in units of capacity (current year capacity units minus the previous year capacity units) by price per unit of capacity of the previous year.

Accepted Answer

A) True 
 B)False

Exam 12: Strategy, Balanced Scorecard, and Strategic Profitability Analysis

The cost leadership strategy is best for a company if the engineering staff is more skilled at creatively designing new products than at making process improvements.

re-engineering benefits are most significant when they focus on one business function rather than crossing functional lines of the business process.

The revenue effect of price recovery is calculated by multiplying the difference in selling price (current year minus the previous year) by ________.

Strategic Analysis of Profitability of King Philip Company: What is the cost effect of the productivity component (c) ?

Successful re-engineering efforts generally involve changing the roles and responsibilities of employees.

Which of the following statements is a possible pitfall while implementing a balanced scorecard?

________ is an example of a total factor productivity measure.

Strategic Analysis of Profitability of King Philip Company: What is the cost effect of the growth component (a) ?

Productivity describes the relationship between different quantities of inputs consumed and the quantities of output produced.

Assuming previous year's production capacity was adequate to produce current year output, the cost effect of growth for fixed costs is calculated by multiplying the difference between ________ by price per unit of capacity in the previous year.

Which of the following statements is true of a balanced scorecard?

Partial productivity and total factor productivity measures work best together because both measures have the same kind of strengths and weaknesses.

Which of the following focuses on these five factors: competitors, potential entrants to the market, equivalent products, bargaining power of customers, and bargaining power of suppliers?

identifying unused capacity for R&D costs is relatively easy once the impact of downsizing is estimated for engineered costs.

Cost effect of productivity for fixed costs is calculated by multiplying the difference in units of capacity (current year capacity units minus the previous year capacity units) by price per unit of capacity of the previous year.