Strategic Management Accounting
Final Exam
Course Introduction
Strategic Management Accounting explores the role of management accounting in formulating and implementing business strategies. The course examines how accounting information supports long-term decision-making, competitive positioning, and value creation. Topics include cost management, performance measurement systems, balanced scorecard, strategic cost analysis, and the use of accounting data in strategic planning and control. Students learn to integrate financial and non-financial information, analyze external and internal factors affecting organizational performance, and provide insights for sustainable competitive advantage in dynamic business environments.
Recommended Textbook
Introduction to Management Accounting 16th Edition by Charles T. Horngren
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17 Chapters
2438 Verified Questions
2438 Flashcards
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Page 2
Chapter 1: Managerial Accounting,the Business
Organization,and Professional Ethics
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) To evaluate managers' decisions and the productivity of organizational units,organizations use ________.
A) annual financial statements
B) quarterly financial statements
C) bimonthly financial statements
D) performance reports
Answer: D
Q2) What is Six Sigma?
A) a process improvement to eliminate waste from the entire enterprise
B) a process improvement to reduce the time products spend in the production process
C) a process improvement to reduce the time products spend in activities that do not add value
D) a data-driven approach to eliminate defects in any process
Answer: D
Q3) Line managers are directly involved with making and selling the organization's products or services.
A)True
B)False
Answer: True
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Chapter 2: Introduction to Cost Behavior and Cost Volume
Profit Relationships
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149 Flashcards
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Sample Questions
Q1) Suppose a hotel has annual fixed costs applicable to its rooms of $2.0 million for its 300-room hotel.Average daily room rents are $50 per room and average variable costs are $10 for each room rented.It operates 365 days per year.If the hotel is completely full throughout the year,what is net income for one year?
A) $1,280,000
B) $2,380,000
C) $3,180,000
D) $4,380,000
Answer: B
Q2) Gokey Company has a contribution-margin ratio of 0.30.Targeted net income is $76,800 and targeted sales volume in dollars is $480,000.What are total fixed costs?
A) $23,000
B) $44,160
C) $67,200
D) $144,000
Answer: C
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4
Chapter 3: Measurement of Cost Behavior
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136 Flashcards
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Sample Questions
Q1) It may be difficult to trace costs to products or services if the costs are ________.
A) volume-driven
B) driven by activities directly related to volume
C) driven by multiple cost drivers
D) none of the above
Answer: C
Q2) Consider the following linear mixed-cost function:
Y = $120,000 + $2.70X
Where: \(\quad Y =\) total annual maintenance cost
\(X =\) mumber of patient-days
What does the $120,000 represent?
A) variable cost per patient-day
B) total variable cost
C) fixed cost per patient-day
D) total fixed cost
Answer: D
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Chapter 4: Cost Management Systems and Activity-Based
Costing
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Sample Questions
Q1) Which of the following statements about period costs is FALSE?
A) Period costs refer to distribution costs and design costs.
B) Period costs include R&D expenses, marketing costs and customer service costs.
C) Merchandising and manufacturing firms treat period costs differently.
D) For merchandising firms, Cost of Goods Sold is not a period cost.
Q2) When a laptop computer is the cost object,the keyboard would be classified as a(n)________.
A) direct cost
B) allocated cost
C) indirect cost
D) unallocated cost
Q3) An example of a strategic management decision is the establishment of a pricing policy for a new product.
A)True
B)False
Q4) An example of a strategic management decision is the selection of the product mix that maximizes profits.
A)True
B)False
6
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Chapter 5: Relevant Information for Decision Making With a
Focus on Pricing Decisions
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Sample Questions
Q1) On the income statement,the absorption approach separates manufacturing costs from ________.
A) some nonmanufacturing costs
B) all nonmanufacturing costs
C) all variable costs
D) all fixed costs
Q2) It is misleading to use the absorption costing income statement to predict the effect of changes in sales volume because ________.
A) variable production costs per unit do not change with small changes in sales volume
B) total fixed production costs do not change with small changes in sales volume
C) fixed production costs per unit do not change with small changes in sales volume
D) total variable production costs do not change with small changes in sales volume
Q3) If a small price increase causes large volume declines,demand is highly inelastic. A)True B)False
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Chapter 6: Relevant Information for Decision Making With a
Focus on Operational Decisions
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148 Flashcards
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Sample Questions
Q1) Inverness Company is considering the replacement of a machine that is presently used in production.The following data are available:
\(\begin{array}{lll}&\text { Old Machine }&\text { NEW Machine }\\
\text { Original cost } & \$ 57,000 & \$ 35,000 \\
\text { Useful life in years } & 17 & 5 \\
\text { Current age in years } & 12 & 0 \\
\text { Book value } & \$ 39,000 & -\\
\text { Disposal value now } & \$ 8,000 & - \\
\text { Disposal value in } 5 \text { years } & 0 & 0 \\
\text { Annual cash operating costs } & \$ 7,000 & \$ 4,000 \end{array}\)
Adding all five years together,what is the difference in total relevant costs between the old machine and the new machine?
A) $12,000
B) $15,000
C) $22,000
D) $37,000
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Page 8
Chapter 7: Introduction to Budgets and Preparing the Master Budget
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148 Flashcards
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Sample Questions
Q1) Paulson Company's expected sales for April are $29,000.Other information follows: \(\begin{array}{ll}\text { Budgeted Operating Expenses }&\text { Amount }\\
\text { Wages } & \$ 4,000 \\
\text { Advertising } & 1,680 \\
\text { Depreciation } & 1,440 \\
\text { Rent } & 2,560 \\
\text { Promotion } & 5 \% \text { of sales } \end{array}\)
What are the total expected operating expenses for April?
A) $6,240
B) $9,680
C) $9,690
D) $11,130
Q2) The first step in preparing the master budget is the ________.
A) cash budget
B) capital budget
C) operating expense budget
D) sales budget
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Chapter 8: Flexible Budgets and Variance Analysis
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Sample Questions
Q1) Rate variances are the same as ________ variances.Efficiency variances are the same as ________ variances.
A) spending; effective
B) activity; static
C) usage; quantity
D) price; quantity
Q2) In which of the following scenarios can Eastman Company NOT have favorable flexible budget variance for direct materials?: When direct material price variance is ________,and when direct material quantity variance is ________,
A) favorable; unfavorable
B) unfavorable; favorable
C) unfavorable; unfavorable
D) favorable; favorable
Q3) Ideal standards make no provision for waste,spoilage and machine breakdowns.
A)True
B)False
Q4) A favorable materials price variance may lead to an unfavorable materials usage variance.
Q5) ......
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Chapter 9: Management Control Systems and Responsibility Accounting
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Sample Questions
Q1) Costs of defective components or products that are scrapped or reworked are examples of ________ costs.
A) prevention
B) appraisal
C) internal failure
D) external failure
Q2) The classic balanced scorecard developed by Robert Kaplan and David Norton includes four categories of key performance indicators.Which of the following items is NOT one of the categories used by Kaplan and Norton?
A) financial
B) customers
C) innovation and learning
D) quality control
Q3) Goal congruence exists when individuals aim at short-term goals and groups aim at long-term organizational goals.
A)True
B)False
Q4) Describe a balanced scorecard and identify the categories of key performance indicators advocated by Kaplan and Norton.
Page 11
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Chapter 10: Management Control in Decentralized Organizations
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Sample Questions
Q1) The following information is available for the Tyson Company: \(\begin{array}{ll}
\text { Sales for year } & \$ 1,000,000 \\
\text { Average invested capital for year } & \$ 500,000 \\
\text { Return on investment for year } & 25 \%
\end{array}\)
Required:
A) Compute capital turnover.
B) Compute operating income.
C) Compute return on sales.
Q2) Incentives do not increase managerial effort toward goal congruence.
A)True
B)False
Q3) The proponents of gross book value for purposes of calculating return on investment maintain that it facilitates comparisons between years and between plants or divisions.
A)True
B)False
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Page 12
Chapter 11: Capital Budgeting
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Sample Questions
Q1) Christina Company will purchase a van for $40,000.It will have a depreciable life of 5 years and a terminal salvage value of $10,000.Assume a tax rate of 20% and a required after-tax rate of return of 12%.The company uses straight-line depreciation for tax purposes.The annual cash operating savings at the end of each year,exclusive of depreciation,are $10,000 for five years.The present value of one for five periods at 12% is 0.5674.The present value of an ordinary annuity of one for five periods at 12% is 3.6048.What is the net present value of the van?
A) $(5,394)
B) $(1,162)
C) $11,909
D) $17,583
Q2) Investments of large amounts of cash in plant assets are called ________.
A) cash outflows
B) capital budgeting
C) capital projects
D) capital outlays
Q3) The real rate of interest equals the risk-free rate plus the business-risk rate.
A)True
B)False
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Page 13
Chapter 12: Cost Allocation
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Sample Questions
Q1) If the vast majority of costs were directly traceable to cost objects,then cost allocation would be a minor issue.
A)True
B)False
Q2) The Technical Services Department of Wichita State University leased a photocopy machine for $2,000 per month plus $0.04 per copy.Additional budgeted variable operating costs were $0.02 per copy.The Technical Services Department estimated the machine would produce 30,000 copies per month.The Accounting Department estimated is would make 6,000 copies per month but it actually made 4,000 copies.Assume fixed and variable cost pools are allocated separately.What is the amount of fixed cost allocated to the Accounting Department for the month?
A) $200
B) $267
C) $360
D) $400
Q3) The preferred cost driver for allocating central corporate support costs to products is either actual or estimated usage.
A)True
B)False
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Chapter 13: Accounting for Overhead Costs
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Sample Questions
Q1) The following information was compiled by Frank Ironman Incorporated: \(\begin{array} { l }
\text {Expected volume of production }&50,000 \text { units }\\
\text {Actual volume of production }&47,500 \text { units }\\
\text { Budgeted fixed overhead costs (for 50,000 budgeted units)}&\$200,000 \\
\text {Actual fixed overhead costs }&\$220,000 \\
\text { Actual variable overhead costs}&\$790,000 \\
\text { Budgeted variable overhead costs (for 50,000 bud geted units)}&\$ 855,000\\ \end{array}\)
Assume the cost allocation base for overhead costs is units of production.What is the fixed overhead flexible budget variance?
A) $6,000 Favorable
B) $12,000 Unfavorable
C) $20,000 Favorable
D) $20,000 Unfavorable
Q2) Variable overhead costs may have a production volume variance.
A)True
B)False
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Page 15
Chapter 14: Job-Order Costing and Process-Costing Systems
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154 Flashcards
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Sample Questions
Q1) The centerpiece of a job-order costing system is the balanced scorecard. A)True
B)False
Q2) Choosing direct labor cost rather than direct labor hours as a cost driver for overhead costs implies that ________.
A) direct labor cost data is more accurate
B) direct labor cost data is easier to obtain
C) higher paid employees use proportionately less overhead support than lower paid employees
D) higher paid employees use proportionately more overhead support than lower paid employees
Q3) Some backflush costing systems eliminate the Finished Goods Inventory account.
A)True
B)False
Q4) Backflush costing has only two categories of costs that include materials and conversion costs.
A)True B)False
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Chapter 15: Basic Accounting: Concepts, techniques, and Conventions
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150 Flashcards
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Sample Questions
Q1) Economic resources that a company owns and expects to provide future benefits are called ________.
A) stockholders' equity
B) assets
C) liabilities
D) retained earnings
Q2) When a company purchases inventory for cash,the net effect on the amount of total assets is zero.
A)True
B)False
Q3) The main sections of the balance sheet include ________.
A) revenues, assets and liabilities
B) assets, liabilities and expenses
C) expenses, revenues and stockholders' equity
D) assets, liabilities and stockholders' equity
Q4) Unexpired costs are expenses.
A)True
B)False
Page 17
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Chapter 16: Understanding Corporate Annual Reports:
Basic Financial Statements
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Sample Questions
Q1) Old equipment having a book value of $12,000 was sold for $20,000 cash.New equipment was purchased for $25,000 cash.Additional equipment was acquired in exchange for a $17,000 long-term note payable.The net cash flow from investing activities was ________.
A) $5,000 cash outflow
B) $22,000 cash outflow
C) $25,000 cash outflow
D) $42,000 cash outflow
Q2) LIFO uses the ________ costs to measure the ending inventory.
A) latest
B) earliest
C) average
D) weighted-average
Q3) A nonoperating item on a multiple-step income statement that reflects financial decisions is ________.
A) gain from sale of inventory
B) interest expense
C) income tax expense
D) operating profit
18
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Chapter 17: Understanding and Analyzing Consolidated Financial Statements
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Sample Questions
Q1) Line items on common-size financial statements are expressed in percentages of some base such as total assets.
A)True
B)False
Q2) When preparing consolidated financial statements,eliminating entries are made to avoid double-counting ________.
A) assets only
B) liabilities only
C) assets, liabilities and stockholders' equity
D) none of the above
Q3) The debt-to-equity ratio is used to judge a company's ________.
A) return on investment
B) liquidity
C) risk of insolvency
D) marketability
Q4) Research suggests that investors are not fooled by companies that choose the least conservative accounting policies to increase net income.
A)True
B)False
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