Strategic Management Accounting
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Course Introduction
Strategic Management Accounting focuses on the integration of accounting information and methods with strategic decision-making processes within organizations. This course explores how management accounting tools such as cost analysis, budgeting, performance measurement, and value chain analysis support the formulation and implementation of organizational strategies. Emphasizing both financial and non-financial information, students learn to analyze competitive environments, evaluate strategic options, and provide insights that drive long-term value creation and performance improvement. Through real-world case studies and practical applications, the course equips students with the skills needed to align accounting practices with strategic objectives in a dynamic business environment.
Recommended Textbook
Managerial Accounting Decision Making and Motivating Performance
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1st Edition by Srikant M. Datar
Chapter 1: The Manager and Management Accounting
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Sample Questions
Q1) Management accountants do not work in teams because they are not a business partner at the firm.
A)True
B)False
Answer: False
Q2) The term used to describe the concept that includes providing financial information for reports to managers and shareholders,and oversight to the overall operations of the accounting system is:
A)internal audit.
B)external audit.
C)controllership.
D)treasury.
E)funding.
Answer: C
Q3) IMA's overarching ethical principles include: Honesty,Fairness,Objectivity,and Responsibility.
A)True
B)False
Answer: True
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Page 3
Chapter 2: An Introduction to Cost Terms and Purposes
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Sample Questions
Q1) A key aspect of making decisions is:
A)analyzing relevant information.
B)analyzing irrelevant information.
C)analyzing unimportant information.
D)analyzing only future information.
E)analyzing only past information.
Answer: A
Q2) Managers should think in terms of unit costs rather than terms of total costs for many decisions.
A)True
B)False
Answer: False
Q3) The unit cost,or average cost,is the ratio of total costs to the number of units produced.
A)True
B)False
Answer: True
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Chapter 3: Cost-Volume-Profit Analysis
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126 Flashcards
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Sample Questions
Q1) Write a short essay and discuss how managers in organizations choose their sales mix.
Answer: Managers strive to please the consumer and groups they serve in the community.Managers adjust their sales mix to meet the demands of the consumers.When there are changes in demand the managers will adjust the products or services they offer to meet the demands or those changes.If a product is smaller,it could impact the breakeven point since the sales mix has shifted to a lower contribution margin.
Q2) The Freezer Company has operating income of $200,000 and $30,000 of income taxes.
Required:
Compute the Freezer Company's net income after taxes.
A)$.15.
B)$60.
C)$170,000.
D)$230,000.
E)$250,000.
Answer: C
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Chapter 4: Job Costing
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Sample Questions
Q1) The original record that supports journal entries in an accounting system is the:
A)job sheet.
B)direct costs.
C)indirect costs.
D)source document.
E)direct materials.
Q2) Material-handling labor costs are included as part of the ________ labor costs of each department.
A)direct
B)indirect
C)support
D)operating
E)manufacturing
Q3) Which method is a good approximation to the more accurate proration method?
Q4) Managers utilize the adjusted-allocation rate approach because it restates all overhead entries in the general ledger and subsidiary ledgers using actual cost rates rather than budged cost rates.
A)True
B)False
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Chapter 5: Process Costing and Cost Allocation
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Sample Questions
Q1) The Flannigan Factory was recently formed to product a specialized part that forms and essential part to go on a refrigerator.The direct materials are added at the start of the production process while conversion costs are added uniformly throughout the production process.December is Flannigan's first month of operations;and,therefore,there was no beginning inventory.Direct materials cost for the month totaled $1,200,000,while conversion costs equaled $1,600,000.The accounting records indicate that 500,000 parts were started in December and 400,000 parts were completed.
Ending inventory was 30% complete as to conversion costs.
Required:
a.What is the total manufacturing cost per part for December?
b.Allocate the total costs between the completed parts and the parts in ending inventory.
Q2) The weighted-average cost is the total of all costs entering the work-in process account divided by total equivalent units of work done to date.
A)True
B)False
Q3) What is the process-costing system for the SG-40 in the assembly department? List the components in each.
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Page 7
Chapter 6: Activity-Based Costing and Activity-Based Management
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Sample Questions
Q1) Management accountants use the cost hierarchy to first calculate the total costs of each product and then they derive per-unit costs by dividing total costs by the number of units produced.
A)True
B)False
Q2) Simple peanut-butter costing broadly averages or spreads the cost of resources uniformly to cost objects.
A)True
B)False
Q3) The Monroe Company manufactures a special saddle.The budgeted indirect total cost associated with the production of the saddle is $100,000.The budgeted number of saddles is 55,000.What is the budgeted indirect cost allocation rate?
A)$1.00
B)$1.05
C)$1.18
D)$1.82
E)$1.90
Q4) What are the benefits to managers that use activity-based costing systems to make design decisions?
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Chapter 7: Pricing Decisions, customer Profitability, and Cost Management
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Sample Questions
Q1) The Walter Foundation invested $3,500,000 in a plant to remanufacture refrigerators.The target operating income from the plant is $250,000 annually.The company plans actual sales of 800 refrigerators at $1,100.00 each.
Required:
Compute the target rate of return on the investment at the Walter Foundation.
A)6.14 %
B)7.14 %
C)8.14 %
D)9.14 %
E)10.14 %
Q2) Life-cycle budgeting highlights costs throughout the product's life cycle and,in doing so,facilitates target pricing,target costing,and value engineering at the design stage before costs are locked in.
A)True
B)False
Q3) What is the target operating income per unit? What is the difference in target operating income per unit compared to the target cost per unit?
Q4) Do service companies use cost-plus pricing?
Page 9
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Chapter 8: Determining How Costs Behave
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Sample Questions
Q1) What is r<sup>2</sup>,the coefficient of determination?
Q2) Costs in a step cost function increase by discrete amounts as the level of activity increases from one range to the next.
A)True
B)False
Q3) The ________ uses only the highest and lowest observed values of the cost driver within the relevant range and their respective costs to estimate the slope coefficient and the constant of the cost function.
A)cost function
B)relevant range
C)high-low method
D)dependent variable
E)independent variable
Q4) Why is the cost hierarchy important to managerial accountants?
Q5) Better cost predictions do not help managers make informed planning and control decisions,such as preparing next year's customer-service budget.
A)True
B)False
Q6) What is the difference between time-series data and cross-sectional data?
Page 10
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Chapter 9: Decision Making and Relevant Information
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Sample Questions
Q1) What is an opportunity cost and why should managers consider it when making decisions?
Q2) Resolving the conflict between the decision model and the performance-evaluation model is a problem in practice.
A)True
B)False
Q3) In which step of the decision-making process do managers compare predicted benefits?
A)Step 1: Identify the Problem and Uncertainties.
B)Step 2: Obtain Information.
C)Step 3: Make Predictions About the Future.
D)Step 4: Make Decisions by Choosing Among Alternatives.
E)Step 5: Implement the Decision,Evaluate Performance,and Learn
Q4) Book value is:
A)original cost minus accumulated depreciation.
B)original cost plus accumulated depreciation.
C)past cost plus accumulated depreciation.
D)future cost plus accumulated depreciation.
E)future cost minus accumulated depreciation.
Q5) List and describe the three measures defined by the theory of constraint.
Page 11
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Chapter 10: Quality, inventory Management, and Time
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111 Flashcards
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Sample Questions
Q1) The ratio of the number of employees that indicate high satisfaction ratings to the number of employees surveyed is ________.
A)employee satisfaction
B)employee experience
C)employee training
D)employee turnover
E)employee empowerment
Q2) Relevant-cost and relevant-revenue analysis ignores allocated costs.
A)True
B)False
Q3) ________ is a costing method that supports the creation of value to customers through cost value streams,as distinguished from individual products or departments.
A)Time driver
B)Design quality
C)Value stream
D)Lean accounting
E)Economic order quantity
Q4) What do managers do when they are uncertain about demand,lead time,or the quantity that suppliers can provide?
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Chapter 11: Capital Investments
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Sample Questions
Q1) Jim's Renovation Services need to purchase a new super hydraulic machine to complete a new job.The initial investment on the machine is $250,000.The machine is expected to generate $130,000 in uniform cash flow each year and it has a five-year expected life.
Required
Compute the payback period.
A)1 year
B)1.25 years
C)1.68 years
D)1.92 years
E)1.98 years
Q2) The payback method ignores cash flows after the payback period.
A)True
B)False
Q3) What is working capital?
Q4) The capital budgeting framework is useful to managers for evaluating the lifetime value of customers as well as the benefits from customer-focused strategies.
A)True B)False
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Chapter 12: Master Budget and Responsibility Accounting
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Sample Questions
Q1) How do managers at multinational companies translate their operating performance into a single currency?
Q2) Which of the following is not true about variances?
A)Variances alert managers to events not easily or immediately evident.
B)Variances permit managers can take corrective actions or exploit available opportunities.
C)Variances prompt managers to probe how well the company has performed in implementing its strategies.
D)Variances sometimes signal managers that their strategies are ineffective.
E)Variances never provide a signal to managers that their strategies are ineffective.
Q3) The only new information managers need to prepare in the production budget is the level of finished goods inventory the company wants to maintain.
A)True
B)False
Q4) The budget is the only benchmark companies use to evaluate performance. A)True
B)False
Q5) How do variances help managers implement and evaluate strategies?
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Chapter 13: Flexible Budgets, cost Variances, and Management Control
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Sample Questions
Q1) A sales-volume variance is the difference between a flexible budget amount and what other data factor?
A)The total flexible budget variable costs.
B)The corresponding static-budget amount.
C)The flexible-budget fixed costs.
D)The percentage of returns on sales.
E)The price recovery rate.
Q2) Flexible-budget variances are a better measure of operating performance than static-budget variances because they compare actual revenues to budgeted revenues and actual costs to budgeted costs for the same units of output.
A)True
B)False
Q3) What is the purpose of standard costing?
Q4) The only difference between the static budget and the flexible budget is that the static budget is prepared for the planned output of units,whereas the flexible budget is based on the actual output of units.
A)True
B)False
Q5) When should managers investigate the cause of variances?
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Chapter 14: Strategy, Balanced Scorecard, and Strategic Profitability Analysis
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Sample Questions
Q1) In 2011,Monarch Aircraft Company sold 36,000 jet panels at $8,000 per panel.In 2012,Monarch lowered the price per panel as a result of unforeseen market forces to $6,000,but sold an equal number of panels.
Required
Compute the revenue effect of price recovery in 2011 and 2012.Was the variance favorable,F,or unfavorable,U?
A)$72,000,000 F
B)$7,200,000 F
C)$72,000,000 U
D)$7,200,000 U
E)$720,000 U
Q2) Which of the following components measures the change in operating income attributable solely to changes in prices of inputs and outputs?
A)Growth.
B)Strategy.
C)Organic.
D)Productivity.
E)Price recovery.
Q3) What happens after the manager identifies unused capacity?
Page 16
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Chapter 15: Transfer Pricing
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Sample Questions
Q1) Cost-based transfer prices are not useful when the internal product is different from the products available externally in terms of quality and customer service.
A)True
B)False
Q2) Why does the opportunity cost guideline measure the minimum transfer price?
Q3) Which of the following is correct about transfer pricing for tax minimization in global firms?
A)Transfer prices affect payroll taxes.
B)Transfer prices affect customs duties.
C)Transfer prices affect value-added taxes.
D)Transfer prices only affect income taxes.
E)Transfer prices affect environment-related taxes.
Q4) Which of the cost scenarios listed below would managers choose to use when they do not consider full costs in cost-based transfer methods?
A)R&D.
B)Payroll.
C)Distribution.
D)Design marketing.
E)Customer service.
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Chapter 16: Performance Measurement and Compensation
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Sample Questions
Q1) The Hobby Shop Company owns outlets in Olympia,WA,Boise,ID,and Boston,MA.The operating income for the Olympia outlet is $260,000 while the operating incomes for the Boise and Boston outlets are $320,000 and $620,000.The 2012 gross book value of the total assets for the Olympia outlet is $2,300,000 and for the Boise outlet and Boston outlet the gross book value of the total assets is $2,800,000 and $4,100,000.
Required
Compute the 2012 ROIs for the Olympia outlet,the Boise outlet,and the Boston outlet for the Hobby Shop Company.
A)10.1%;11.2%;9.9%
B)11.3%;11.4%;15.1%
C)12.5%;12.3%;16.0%
D)10.9%;11.1%;13.5%
E)9.8%;10.2%;14.0%
Q2) The imputed cost of the investment is a cost recognized in particular situations and it is always recorded in financial accounting systems.
A)True
B)False
Q3) Why may current-cost estimates be difficult to obtain for some assets?
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