Strategic Cost Management
Question Bank
Course Introduction
Strategic Cost Management explores the integration of cost management techniques with business strategy to enhance organizational performance and competitiveness. The course covers advanced concepts such as activity-based costing, target costing, life-cycle costing, and value chain analysis, demonstrating how cost information supports strategic decision-making and long-term planning. Students will analyze case studies to learn how leading organizations design cost control systems to achieve operational efficiency, foster innovation, and sustain competitive advantage in dynamic markets. The course also addresses the role of management accountants as strategic partners in guiding resource allocation and optimizing value creation.
Recommended Textbook
Managerial Accounting The Cornerstone of Business Decision Making 7th Edition by Maryanne M.
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2443 Verified Questions
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Activity-based costing is a <i>less</i> detailed approach to determining the cost of goods and services than traditional cost accounting.
A)True
B)False
Answer: False
Q2) Investigating production variances and adjusting the production process is an example of A) planning.
B) controlling.
C) decision making.
D) all of these.
Answer: B
Q3) Management accounting information is only used by manufacturing organizations. A)True
B)False
Answer: False
Q4) The managerial accounting system produces information for __________ users.
Answer: internal
Q5) The ____________________ is responsible for the finance function.
Answer: treasurer
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Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) Materials that become part of a product usually are classified as _______________.
Answer: direct materials.
Q2) During the month of June, Carney & Whitley Inc.had cost of goods manufactured of $123,200, direct materials cost of $57,200, direct labor cost of $40,700, and manufacturing overhead cost of $28,600.The work in process balance on June 30 was equal to $11,000.What was the work in process balance on June 1?
A) $7,700
B) $13,000
C) $10,000
D) $115,000
Answer: A
Q3) Which of the following is an example of a service?
A) motorcycle
B) eye exam
C) stereo
D) television
Answer: B
Q4) _____________________ is the way that a cost is linked to some cost object.
Answer: Assigning costs
4
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Chapter 3: Cost Behavior, Cost Forecasting, and Segmented Income Statements
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Sample Questions
Q1) The fabric used to manufacture curtains is an example of a material or a ____________ cost.
Answer: variable
Q2) ___________________ are costs that in total vary in direct proportion to changes in output within the relevant range. Answer: Variable costs
Q3) direct labor
A)variable
B)fixed Answer: A
Q4) A variable cost increases in total when output increases but the per-unit costs remains the same.
A)True
B)False Answer: True
Q5) raw materials
A)variable
B)fixed Answer: A
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Chapter 4: Job-Order Costing and Normal Cost Overhead Application
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Sample Questions
Q1) What is the total amount debited to Finished Goods Inventory in the current year?
A) $490,000
B) $510,000
C) $450,000
D) $550,000
Q2) Compute the cost per unit.(Note: Round the unit cost to two decimal places.)
A) $7.06
B) $3.50
C) $6.32
D) $10.05
E) None of these.
Q3) Manufacturing and service firms producing unique products or services require job-order accounting systems.
A)True
B)False
Q4) _________________ is found by multiplying the predetermined overhead rate by the actual use of the associated activity for the period.
Q5) In a _______________________________ costs are accumulated by job.
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Chapter 5: Activity-Based Costing and Management
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Sample Questions
Q1) A(n) ____ is derived from the interview process (or written survey).
A) work distribution matrix
B) activity explanation matrix
C) driver consumption matrix
D) value analysis matrix
E) tracing matrix
Q2) Activities that are performed each time a unit is produced.
A)activity drivers
B)activity-based costing system
C)consumption ratio
D)unit-level activities
E)activity attributes
F)resource drivers
Q3) One of the questions answered by activity analysis should be "What activities are done?"
A)True
B)False
Q4) A work distribution matrix is derived from an interview or a written survey.
A)True
B)False
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Chapter 6: Process Costing
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Sample Questions
Q1) Two methods used to determine equivalent units of production in process costing are
A) weighted average and FIFO
B) FIFO and LIFO
C) weighted average and LIFO
D) weighted average and exact costing
Q2) Which of the following companies would be least likely to use a process costing system?
A) an oil refinery
B) a home-builder
C) a fertilizer company
D) a chemical company
Q3) Under the FIFO production costing method, the two categories of completed units used to compute the total cost of units completed during a period are:
A) beginning work-in-process units and units started.
B) units started and completed and ending work-in-process units.
C) beginning work-in-process units and units started and completed during the current period.
D) other categories.
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Page 8
Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Sales mix is the relative combination of
A) inputs required to produce a product.
B) outputs produced by a firm.
C) products sold by a firm.
D) distribution channels used by a firm.
E) resources used to produce a product.
Q2) Noel & Vang Company sells only one product at a regular price of $9.00 per unit.Variable expenses are 55% of sales, and fixed expenses are $40,000.Management has decided to decrease the selling price to $8.00 in the hope of increasing its volume of sales.What is the contribution margin ratio when the selling price is reduced to $8.00 per unit? (Note: Round answer to two decimal places.)
A) 38.13%
B) 40.50%
C) 75.46%
D) 60.50%
Q3) The "what-if" process of altering certain key variables to assess the effect on the original outcome is also called a __________________.
Q4) The ______________________ is the proportion of each sales dollar that must be used to cover variable costs.
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Chapter 8: Tactical Decision-Making and Relevant Costing
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Sample Questions
Q1) A segment margin is always greater than or equal to zero.
A)True
B)False
Q2) Which costs of the special order relate to flexible resources?
A) wood and glass
B) wood, glass, and variable overhead
C) depreciation on machinery
D) wood, glass, and direct labor
E) wood, glass, direct labor, and setup labor
Q3) A major advantage of markup pricing is that standard markups are easy to apply.
A)True
B)False
Q4) What is the amount of machine time for model P-4 in terms of percent of a machine hour?
A) 10%
B) 20%
C) 25%
D) 30%
E) 50%
Q5) Most short-run decisions require extensive consideration of ___________.
Page 10
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Chapter 9: Profit Planning and Flexible Budgets
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Sample Questions
Q1) The _______________ tells how many units must be produced to meet sales needs and to satisfy ending inventory requirements.
Q2) The total budgeted overhead for an expected activity level of 10,000 units is:
A) $139,400.
B) $64,400.
C) $124,000.
D) $12,400.
E) None of these.
Q3) Cash budgets are often prepared monthly or even weekly.
A)True
B)False
Q4) What are the expected cash receipts in the month of November?
A) $200,000
B) $40,000
C) $190,000
D) $160,600
E) $114,000
Q5) The ________________ budget is based on the actual level of activity.
Q6) The controller of the company usually serves as the __________________.
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Chapter 10: Standard Costing and Variance Analysis
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Sample Questions
Q1) What is Crawford's fixed overhead spending variance for last year?
A) $60,000 F
B) $24,000 F
C) $36,000 U
D) $30,000 U
Q2) Which of the following statements is true of a normal costing system?
A) It predetermines the overhead costs for product costing.
B) It assigns standard costs to direct materials and direct labor.
C) It assigns direct materials at a budgeted rate for product costing.
D) It assigns the actual costs of all three manufacturing inputs to products.
E) All of these are correct.
Q3) Calculate the fixed overhead spending variance.
A) $32,000 F
B) $0
C) $4,000 U
D) $12,000 U
E) $4,000 F
Q4) ___________________ can provide an initial guideline for setting standards, but should be used with caution because they can perpetuate existing inefficiencies.
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Chapter 11: Performance Evaluation and Decentralization
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Sample Questions
Q1) Unlike ROI, residual income does not encourage a short-run orientation.
A)True
B)False
Q2) Turnover is the most common measure of performance for an investment center.
A)True
B)False
Q3) When the selling division can sell and the buying division can buy externally at the market price, the company as a whole will be in the same position whether or not a market price transfer takes place internally.
A)True
B)False
Q4) The Auto Division of Big Department Store had a net operating income of $560,000, a net asset base of $4,000,000, and a required rate of return of 12%.Sales for the period totaled $3,000,000.The residual income for the period is
A) $480,000.
B) $360,000.
C) $120,000.
D) $80,000.
Q5) _________________ emphasizes only effectiveness of implementation.
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Chapter 12: Capital Investment Decisions
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Sample Questions
Q1) The internal rate of return is the most widely used of the capital investment techniques.
A)True
B)False
Q2) Which of the following formulas is used to compute the accounting rate of return?
A) Average Income / Initial Investment
B) Initial Investment / Annual Cash Flow
C) Net Profit / Initial Cash Flow
D) Present Value of the Investment / Average Income
E) (Average Income + Initial Investment) / Initial Investment
Q3) Lucas Company is considering a project with an initial investment of $530,250 in new equipment that will yield annual net cash flows of $95,000, and will be depreciated at $75,750 per year over its seven year life.What is the internal rate of return?
A) 8%
B) 6%
C) 12%
D) 10%
E) 14%
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Sustainability, Quality Cost, Lean Accounting, International Issues, Enterprise Risk Management, the Managerial Accountant in
Forensicfraud Accounting
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Sample Questions
Q1) The weekly unit product cost for a single-product value stream is calculated by:
A) dividing total actual value-stream costs by units shipped.
B) multiplying actual materials cost by units produced.
C) adding each unit's materials cost and the average conversion cost.
D) subtracting actual conversion costs from total actual value-stream costs.
Q2) Over half the cases of fraud are discovered through:
A) tips and by accident.
B) internal audits and external audits.
C) internal controls and external audits.
D) internal audits and internal controls.
Q3) When quality costs reach the optimal range of 2 to 4% of sales, control costs typically account for about _____ of total quality costs.
A) 10 to 15%
B) 80 to 85%
C) 20 to 30%
D) 40 to 50%
Page 15
Q4) A _________ is one that does not conform to quality specifications.
Q5) _________ can be defined as the difference between the inherent risk and the residual risk produced by the particular risk response.
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Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) The statement of cash flows does not report the A) sources of cash in the current period.
B) uses of cash in the current period.
C) amount of checks outstanding at the end of the period.
D) change in the cash balance for the current period.
Q2) A decrease in accounts payable is added to net income in the operating activities section of the statement of cash flows prepared under the indirect method.
A)True
B)False
Q3) The indirect method of reporting the cash flows from operating activities on the statement of cash flows is the method most widely used in practice.
A)True
B)False
Q4) Using the indirect method, patent amortization expense for the period
A) is deducted from net income.
B) has no impact on cash flows.
C) causes cash to decrease.
D) is added to net income.
Q5) Income statements are prepared on a (n) ______________.
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) ____________ are fractions or percentages computed by dividing one account or line-item amount by another.
Q2) Which of the following analysis expresses each item in a financial statement as a percent of a base amount?
A) Variance analysis
B) Standard analysis
C) Vertical analysis
D) Horizontal analysis
Q3) _____________________ expresses a line item as a percentage of some other line item for the same period.
Q4) In vertical analysis, line items on the income statement are generally expressed as a percentage of A) net income.
B) net sales.
C) cost of goods sold.
D) total assets.
Q5) Labor markets can impact industrial statistics and standards. A)True
B)False
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