Strategic Management Accounting Exam
Bank
Course Introduction
Strategic Management Accounting explores the role of accounting information in developing and implementing business strategies to achieve long-term organizational goals. The course emphasizes the use of management accounting techniques and tools such as activity-based costing, balanced scorecards, and value chain analysis in strategic decision-making, performance measurement, and competitive positioning. Students will learn how to integrate financial and non-financial data to support strategic initiatives, analyze internal and external business environments, and align accounting practices with broader organizational objectives, preparing them to contribute to effective strategic planning and control.
Recommended Textbook
Cost Management A Strategic Emphasis 8th Edition by Edward Blocher
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Page 2
Chapter 1: Cost Management and Strategy
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Sample Questions
Q1) When managers produce value for the customer, their orientation consists of all the following except:
A) Quality and Service.
B) Timeliness of delivery.
C) The ability to respond to the customer's desire for specific features.
D) State of the art manufacturing facilities.
Answer: D
Q2) Which of the following is not a contemporary management technique used by the management accountant to focus on process improvement?
A) Enterprise risk management
B) Lean accounting
C) Life cycle costing
D) Enterprise sustainability
Answer: C
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Sample Questions
Q1) A firm succeeds on its ability to deliver products to customers more quickly than rival companies in its industry.This skill is an example of the firm's:
A)Core competency.
B)Research effectiveness.
C)Production efficiency.
D)Cost control effectiveness.
E)Value-chain analysis.
Answer: A
Q2) Which of the following is not a reason why global companies choose to report on corporate responsibility?
A)Ethical considerations.
B)Innovation and learning.
C)Risk management.
D)Market share.
E)Saves time.
Answer: E
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Chapter 3: Basic Cost Management Concepts
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Sample Questions
Q1) Which of the following is an example of an indirect cost?
A)Cost of downtime
B)Cost of labor
C)Cost of materials
D)Cost of packaging materials
Answer: A
Q2) Which of the following is not a correct pair between the activity and the potential cost driver?
A)Provide cashier service-number of customers
B)Process loan applications-number of loan applications processed
C)Mail customer statements-number of accounts by customer type and size
D)Advise customers on banking services-number of ATM transactions
Answer: D
Q3) The main objective(s) of internal accounting controls is/are:
A)To increase customer satisfaction.
B)To increase revenue.
C)To prevent or detect errors and fraudulent acts.
D)To facilitate new product lines.
E)To increase employee morale.
Answer: C
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Chapter 4: Job Costing
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Sample Questions
Q1) Which of the following journal entries is correct if scrap is being incurred and sold for all jobs in common in the amount of $600?
A) Cash\(\quad\)\(\$ 600\)
Work-in-Process Inventory\(\quad\)\(\$ 600\)
B) Cash\(\quad\)\(\$ 600\)
Finished Goods Inventory\(\quad\)\(\$ 600\)
C) Cash\(\quad\)\(\$ 600\)
Factory Overhead\(\quad\)\(\$ 600\)
D) \(\begin{array} { l c l }
\text { Cash } & \$ 600 & \\
\text { Work-in-Process Inventory } & \$ 200 \\
\text { Finished Goods Inventory } & \$ 200 \\
\text { Factory Overhead } & \$ 200
\end{array}\)
Q2) Factory overhead can be over-or under-applied because:
A)Some actual factory overhead cost varies from the expected.
B)Some actual factory overhead costs are incurred unexpectedly.
C)Production volume may vary from expected volume.
D)All of the above.
E)None of the above.(A, B or C)
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Page 6
Chapter 5: Activity-Based Costing and Customer
Profitability Analysis
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Sample Questions
Q1) Which of the following is a benefit of activity-based costing?
A)Reduced overhead costs.
B)More accurate measures of production volume.
C)Facilitate better product pricing decisions.
D)Having fewer cost drivers than volume-based costing systems.
E)More streamlined manufacturing processes.
Q2) An activity that is performed for each unit of production is a(n):
A)Product-level activity.
B)Facility-level activity.
C)Unit-level activity.
D)Performance-level activity.
E)Batch-level activity.
Q3) The cost of sales visits is a:
A)Customer unit-level cost.
B)Customer batch-level cost.
C)Customer-sustaining cost.
D)Distribution-channel cost.
E)Sales-sustaining cost.
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Chapter 6: Process Costing
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Sample Questions
Q1) In a process costing system, the cost of abnormal spoilage should be:
A)Prorated between units transferred out and ending inventory.
B)Included in the cost of units transferred out.
C)Treated as a loss in the period incurred.
D)Added to overhead.
Q2) Reichhold Chemical Company uses process costing together with:
A)Standard costing.
B)Activity-based costing.
C)Backflush costing.
D)Throughput costing.
Q3) Which one of the following is one of the key steps in determining process costs?
A)Assigning the total manufacturing costs to the units completed and transferred out and the units of work in process at the end of the period.
B)Analyzing the physical flow of production units.
C)Computing the cost per equivalent unit for each manufacturing cost element.
D)Calculating equivalent units of production for all manufacturing cost elements.
E)All of the above are correct.
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8
Chapter 7: Cost Allocation: Departments, Joint Products, and
By-Products
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Sample Questions
Q1) Net Realizable Value (NRV) of a product is:
A)Split-off cost - profit margin - additional processing and selling cost.
B)Profit at split-off + additional processing and selling cost.
C)Ultimate sales value - additional processing and selling cost.
D)Ultimate sales value + additional processing and selling cost.
E)Cost allocation plus separable cost.
Q2) Which of the following is an advantage of the sales value at split-off method?
A)Easy to calculate.
B)Market prices for some industries change constantly.
C)The sales price might not be available.
D)Conceptually superior to the revenue recognition method.
Q3) The cost allocation method most widely used because of its accuracy and ability to provide a detailed level of analysis is:
A)Departmental approach.
B)Activity-based approach.
C)Direct approach.
D)Accounting approach.
E)Joint product costing.
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Chapter 8: Cost Estimation
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Sample Questions
Q1) Which one the following is a variable that takes on values of 1, 2, 3, for each period in sequence?
A) Dummy variable.
B) Price change index.
C) Trend variable.
D) Dependent variable.
E) Independent variable.
Q2) A measure of the statistical reliability of each independent variable is:
A) Correlation.
B) t-value.
C) R-Squared.
D) Standard error.
E) Multicollinearity.
Q3) A data point that is outside the normal distribution of data is called an "outlier," which is often removed from the data before analysis because it:
A) Leads to unbiased calculations.
B) Can distort the results of the data analysis.
C) Has an upward bias on the statistical measures in regression.
D) Will always add bias to the results of a high-low analysis.
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Page 10
Chapter
CVP Analysis
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Sample Questions
Q1) The CVP profit-planning model assumes that over the relevant range of activity:
A) Only revenues are linear.
B) Only revenues and fixed costs are linear.
C) Only revenues and variable costs are linear.
D) Variable cost per unit decreases because of increases in productivity.
E) Both revenues and total costs are linear.
Q2) For the current year, Power Cords Corp. expected to sell 42,000 industrial power cords. Fixed costs were expected to total $1,650,000; unit sales price was expected to be $3,750; and unit variable costs were budgeted at $2,250.
Power Cords Corp.'s margin of safety (MOS) in units is:
A) 48,800.
B) 39,000.
C) 40,900.
D) 36,100.
E) 32,500.
Q3) In measuring the variable cost per unit, CVP analysis includes:
A) Only variable production costs.
B) Only variable distribution and selling costs.
C) Both variable production and variable selling/distribution costs.
Page 11
D) Only variable and semi-variable production costs.
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Chapter 10: Strategy and the Master Budget
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Sample Questions
Q1) Which of the following budgets is not a financial budget?
A) Sales budget.
B) Cash receipts budget.
C) Budgeted cash-flow statement.
D) Budgeted balance sheet.
Q2) In preparing a budget for the first three months of the year starting in October, Dubya Company is planning the number of units of merchandise to order each month.The company's policy is to have 40% of the next month's sales on hand at the end of the current month.Projected sales for October, November, and December are 40,000 units, 50,000 units, and 100,000 units, respectively.
Required: How many units must be ordered in November?
Q3) Discuss the components of each of the following manufacturing cost budgets:
1.Production budget
2.Direct materials purchases budget
3.Direct labor budget
4.Factory overhead budget
5.Cost of goods manufactured budget
6.Cost of goods sold budget.
Q4) What is the focus of activity-based budgeting (ABB)? What is the principal advantage of ABB?
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Chapter 11: Decision Making With a Strategic Emphasis
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Sample Questions
Q1) Maxwell Manufacturing is contemplating the purchase of a new machine to replace a machine that has been in use for seven years. The old machine has a net book value (NBV) of $50,000 and still has five years of useful life remaining. The old machine has a current market value of $5,000, but is expected to have no market value after five years. The variable operating costs and depreciation expenses (straight-line basis) are $135,000 per year. The new machine will cost $90,000, has an estimated useful life of five years with zero disposal value after five years, and an annual operating expense of $118,000 (including straight-line depreciation). Considering the five years in total and ignoring the time value of money and income taxes, what is the difference in total relevant costs for the two decision alternatives (keep vs. replace)?
A) $0.
B) $25,000.
C) $35,000.
D) $40,000.
E) $50,000.
Q2) What strategic factors/considerations are generally relevant to the special order decision problem (i.e., whether a company should accept a one-time order from a customer with whom the company does not generally do business)?
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Chapter 12: Strategy and the Analysis of Capital Investments
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Sample Questions
Q1) For a typical capital investment project, the bulk of the investment-related cash outflow occurs:
A) During the initiation stage of the project (i.e., at time period 0).
B) During the operation stage of the project (i.e., after time period 0).
C) Either during the initiation stage or the operation stage.
D) During neither the initiation stage nor the operation stage.
E) Evenly during all three stages: initiation, operation, and final disposal.
Q2) A composite of the cost of various sources of funds comprising a firm's capital structure is its:
A) Internal rate of return (IRR).
B) Weighted-average cost of capital (WACC).
C) Book (accounting) rate of return.
D) Modified internal rate of return (MIRR).
E) Accounting rate of return (ARR), after tax.
Q3) Conceptually, a firm's capital structure is its:
A) Mix of debt and equity capital, expressed in book-value terms.
B) Mix of debt and equity capital, expressed in market-value terms.
C) Equity capital only, expressed in book-value terms.
D) Equity capital only, expressed in market-value terms.
Page 14
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Chapter 13: Cost Planning for the Product Life Cycle: Target
Costing, Theory of Constraints, and Strategic Pricing
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Sample Questions
Q1) Reduced time-to-market, reduced expected service cost, and ease-of-manufacture are critical success factors at which stage of the cost life cycle?
A) R & D.
B) Product planning and scheduling.
C) Product design.
D) Manufacturing.
Q2) Place the five steps in implementing a target costing approach in the proper order:
1 - Determine desired profit
2 - Use kaizen costing and operational control to reduce costs
3 - Determine the market price
4 - Use value engineering to identify ways to reduce product costs
5 - Calculate the target cost at market price less desired profit
A) 3,2,1,4,5.
B) 2,5,4,1,3.
C) 4,5,1,3,2.
D) 3,1,5,4,2.
E) 5,3,2,1,4.
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Chapter 14: Operational Performance Measurement:
Direct-Cost Variances, and the Role of Nonfinancial
Performance Measures
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Sample Questions
Q1) Ventura uses a just-in-time (JIT) manufacturing system for all its materials, components, and products. The master budget of the company for June called for use of 11,000 square feet of materials, while the flexible budget for the actual output of the month had 10,000 square feet of materials at a standard cost (SP) of $9.60 per square foot. Company records show that the actual price paid (AP) for the materials used in June was $9.50 per square foot, and that the direct materials purchase-price variance for the month was $1,040.
The actual total quantity of materials purchased during the month, rounded to the nearest whole number, was:
A) 10,000 square feet.
B) 10,400 square feet.
C) 11,000 square feet.
D) 13,840 square feet.
E) 14,880 square feet.
Q2) Discuss some major differences between static and flexible budgets.
Q3) Explain the calculation and interpretation of a sales price variance for any given period. How does this variance relate to the total flexible-budget variance for the period?
Page 16
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Chapter 15: Operational Performance Measurement:
Indirect-Cost Variances and Resource-Capacity Management
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Sample Questions
Q1) Gerhan Company's flexible budget for the units manufactured in May shows $15,640 of total factory overhead; this output level represents 70% of available capacity. During May, the company applied overhead to production at the rate of $3.00 per direct labor hour (DLH), based on a denominator volume level of 6,120 DLHs, which represents 90% of available capacity. The company worked 5,000 DLHs and incurred $16,500 of total factory overhead cost during May, including $6,800 for fixed factory overhead. Under a three-variance breakdown (decomposition) of the total overhead variance, what is the total factory overhead spending variance (to the nearest whole dollar) for May?
A) N/A this variance does not exist in a three-variance analysis of the total overhead variance.
B) $300 favorable.
C) $380 unfavorable.
D) $480 unfavorable.
E) $1,160 unfavorable.
Q2) What are the four (4) steps in determining the standard fixed factory overhead application rate? Does the procedure differ for product-costing versus cost-control purposes? Explain.
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Chapter 16: Operational Performance Measurement:
Further Analysis of Productivity and Sales
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Q1) (Units sold budgeted sales units) × (Budgeted contribution margin per unit) equals:
A) Sales-mix variance.
B) Market size variance.
C) Sales quantity variance.
D) Sales volume variance.
E) Flexible budget variance.
Q2) The two major contributing factors to a sales volume variance are deviations in:
A) Market size and market share.
B) Market size and sales quantity.
C) Sales mix and selling price.
D) Sales mix and sales quantity.
E) Sales price and sales quantity.
Q3) The market size variance arises because of changes:
A) In the total market size of the firm's product.
B) In the firm's proportion in the total market.
C) In the number of firms in the market.
D) In the firm's total sales volume.
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Chapter 17: The Management and Control of Quality
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Sample Questions
Q1) The quality cost of prevention:
A) Includes the cost of detecting poor-quality outputs.
B) Refers only to zero-defect programs.
C) Is considered an "upstream" (i.e., prior-to-production) cost.
D) Is a component of the cost of non-conformance.
E) Includes the cost of lost business due to poor-quality outputs.
Q2) The set of international quality-management standards, which provide guidance and tools for organizations that want to ensure quality outputs of goods and services, is referred to as:
A) ISO 14000.
B) International Financial Reporting Standard (IFRS) No. 14000.
C) International Financial Reporting Standard (IFRS) No. 9000.
D) ISO 9000.
E) Securities and Exchange Commission (SEC) Release 20-F.
Q3) Which of the following is not a likely consequence of improved product quality?
A) Increased sales returns.
B) Decreased warranty repair costs.
C) Reduced total manufacturing costs.
D) Increased product selling prices.
E) Reductions in rework costs.
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Chapter 18: Strategic Performance Measurement: Cost
Centers, Profit Centers, and the Balanced Scorecard
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Sample Questions
Q1) If a manager's evaluation is performed before the manager's efforts and decisions have been made, then the evaluation is performed:
A) Ex post.
B) Ex ante.
C) Ex input.
D) Post ante.
Q2) Costs such as depreciation, taxes and insurance usually extending beyond one year are considered:
A) Controllable fixed costs.
B) Noncontrollable fixed costs.
C) Noncontrollable variable costs.
D) Controllable variable costs.
E) Controllable margin costs.
Q3) SBU is the acronym for:
A) Small Business Unit.
B) Sustainable Business Unit.
C) Standard Business Unit.
D) Strategic Business Unit.
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Chapter 19: Strategic Performance Measurement:
Investment Centers and Transfer Pricing
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Sample Questions
Q1) Residual income (RI) may be a better measure for performance evaluation of an investment center than return on investment (ROI) because:
A) Problems associated with measuring the asset base are eliminated.
B) Desirable investment decisions will not be discouraged by high-rate-of-return divisions.
C) Only the gross book value (GBV) of assets needs to be calculated.
D) Returns do not increase as assets are depreciated.
E) The arguments over the appropriate discount rate to use in the calculations are eliminated.
Q2) If after-tax income of Grey Division, adjusted for economic value, is 15% of sales, capital employed is $5,000,000 (adjusted for equity-equivalents), the divisional cost of capital (discount rate) is 8%, and sales are $12,000,000, then Economic Value Added (EVA®) is:
A) $1,800,000
B) $400,000
C) $1,400,000
D) $3,200,000
E) Undeterminable given the information provided.
Q3) 0
Page 21
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Chapter 20: Management Compensation, Business
Analysis, and Business
Valuation
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Sample Questions
Q1) When strategic performance measures or critical success factors are used to determine bonus compensation, the bonus will usually depend either on the amount of improvement in the measure or on:
A) Maintaining the current level.
B) Achieving a predetermined goal.
C) Quality of work completed.
D) Intensity of effort expended.
Q2) Which one of the following refers to the firm's ability to pay its current operating expenses and maturing debt?
A)Discounted cash flow.
B)Liquidity.
C)Earnings base.
D)Profitability.
E)Purchasing power.
Q3) Which one of the following items is not a measure of a company's liquidity?
A) Accounts receivable turnover.
B) Return on equity.
C) Quick ratio.
D) Cash flow ratio.
E) Day's sales in inventory.
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