Strategic Management Accounting Test Preparation
Course Introduction
Strategic Management Accounting focuses on the use of financial and non-financial information to aid strategic decision-making in organizations. The course explores advanced management accounting techniques such as balanced scorecard, value chain analysis, activity-based costing, and competitor analysis. Students will learn how to align accounting systems with organizational strategy, evaluate performance, and support long-term planning in dynamic business environments. Emphasis is placed on the role of management accountants as strategic partners, providing insights that drive sustainable competitive advantage.
Recommended Textbook
Managerial Accounting An Introduction to Concepts Methods and Uses 11th Edition by Michael W.
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13 Chapters
1638 Verified Questions
1638 Flashcards
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Page 2
Chapter 1: Fundamental Concepts
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) Fixed costs expressed on a per unit basis
A)will react directly with changes in activity.
B)will react inversely with changes in activity.
C)are not affected by activity.
D)should be ignored in making decisions since they cannot change over the long run.
Answer: B
Q2) How is cost,as used in managerial accounting,distinguished from expense,as used in financial accounting?
A)A cost is a sacrifice of resources and expenses are recorded in accounting records,but not all costs appear in accounting records.
B)All expenses are costs,but not all costs are expenses in the period of incurrence,even though they will become expenses in some later period.
C)Managerial accounting deals primarily with costs,not expenses,while financial accounting primarily deals with expenses for financial reporting as defined by generally accepted accounting principles.
D)All of the answers are correct.
Answer: D
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3
Chapter 2: Measuring Product Costs
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125 Flashcards
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Sample Questions
Q1) Continuous flow processing is most appropriate for Type of Product Length of Production Run
A)Customized Short
B)Customized Long
C)Standardized Short
D)Standardized Long
Answer: D
Q2) Which costing system uses equivalent units in the computation of costs?
A)Job costing
B)Process costing
C)Both a and b
D)Neither a nor b
Answer: B
Q3) Compare and contrast normal costing and actual costing.
Answer: Actual costing measures product costs using actual costs incurred.Normal costing uses actual direct material and direct labor,plus an amount representing "normal" manufacturing overhead.Under normal costing,a firm derives a rate for applying overhead to units produced before the production period,then uses this "predetermined rate" in applying overhead to each unit as the firm produces it.
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Page 4
Chapter 3: Activity-Based Management
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139 Verified Questions
139 Flashcards
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Sample Questions
Q1) Which of the following costs are not capacity-sustaining activities in the product cost hierarchy?
A)Plant management.
B)Building depreciation and rent.
C)Heat and lighting.
D)Market research.
Answer: D
Q2) Which is not an example of a cost driver?
A)General and administrative expenses.
B)Machine hours.
C)Number of inspections.
D)Number of different customers.
Answer: A
Q3) Which of the following are true regarding activity-based cost management (ABCM)?
A)ABCM has two parts,the costing part known as activity-based costing and the management part known as activity-based management.
B)ABCM rests on the premise that products require activities.
C)ABCM rests on the premise that activities consume resources.
D)All of the answers are correct.
Answer: D
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Chapter 4: Strategic Management of Costs,quality,and Time
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146 Verified Questions
146 Flashcards
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Sample Questions
Q1) The annual award to Japanese companies created in 1950 by the Union of Japanese Scientists and Engineers that focuses on quality improvement is called the A)Baldrige Award.
B)Deming Prize.
C)ISO 9000 Award.
D)UJSE Prize.
Q2) Which critical success factor means giving the customer what the firm promised;it is the degree to which the customer is satisfied?
A)Service
B)Quality
C)Quantity
D)Cost
Q3) Why does Just-in-time requires total quality management?
Q4) How do many management accountants measure waste in the organization?
A)By determining waiting time.
B)By determining direct materials.
C)By determining direct labor
D)By determining manufacturing overhead.
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Q5) Distinguish between the traditional view of quality and the quality-based view.
Chapter 5: Cost Drivers and Cost Behavior
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114 Flashcards
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Sample Questions
Q1) Which of the following terms describes the range of activity over which the firm expects a set of cost behaviors to be consistent?
A)irrelevant range.
B)relevant range.
C)short-range.
D)long-range.
Q2) The method of cost estimation where the accountant assigns costs to each of the inputs to estimate the cost of the outputs is known as:
A)regression.
B)account analysis.
C)engineering methods.
D)All of the answers are correct.
Q3) Distinguish between variable costs and fixed costs,between short run and long run,and define the relevant range.
Q4) Which of the following can complicate the collection of data to estimate costs?
A)inflation and deflation,missing data,and outliers.
B)allocated and discretionary costs.
C)mismatched time periods and trade-offs in choosing the time period.
D)All of the answers are correct.
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Chapter 6: Financial Modeling for Short-Term Decision Making
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) A basic financial model that summarizes the effects of volume changes on an organization's costs,revenue,and income is the
A)total revenue-total cost model.
B)break-even model.
C)cost-volume-profit model.
D)program,planning,and profit model.
Q2) Break-even and target profits.Analysis of the operations of Reyes Company shows the fixed costs to be $140,000 and the variable costs to be $7 per unit.Selling price is $14 per unit.
Required:
a.Derive the break-even point expressed in units.
b.How many units must the firm sell to earn a profit of $168,000?
c.What would profits be if revenue from sales were $2,100,000? (Reyes Company;break-even and target profits. )
Q3) Identify the underlying assumptions of cost-volume-profit analysis.
Q4) Explain the use of financial modeling in a multiple product setting.
Q5) How can financial modeling be used for profit planning purposes?
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Q6) Explain what is meant by the margin of safety and how it is used by managers.
Chapter 7: Differential Cost Analysis for Operating Decisions
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Which of the following statements is true when there is only one scarce resource?
A)Choose the product that gives the largest contribution per unit of the scarce resource used.
B)Choose the product that gives the smallest contribution per unit of the scarce resource used.
C)Choose the product that gives the largest contribution per unit of all of the resources used.
D)Choose the product that gives the smallest contribution per unit of all of the resources used.
Q2) Target costs equal which of the following?
A)target prices minus target profits.
B)fixed costs plus variable costs.
C)prime costs plus conversion costs.
D)opportunity cost plus cost of capital.
Q3) What is throughput contribution?
A)sales dollars minus direct materials costs.
B)sales dollars minus direct materials and direct labor costs.
C)sales dollars minus direct materials,direct labor,and overhead costs.
D)sales dollars minus actual total direct and indirect costs.
Page 9
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Chapter 8: Capital Expenditure Decisions
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126 Flashcards
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Sample Questions
Q1) Describe the steps of the net present value method for making long-term decisions using discounted cash flows,and explain the effect of income taxes on cash flows.
Q2) The periodic cash flows associated with an investment project include which of the following?
A)savings in taxes caused by deductibility of depreciation on tax return.
B)income tax effect of gain(loss)on disposal of existing assets.
C)asset and freight costs.
D)all of the above.
Q3) What should a firm do to reduce the temptation for planners to inflate their estimates of the benefits associated with the project to get it approved?
A)conduct regular capital investment post-audits.
B)fire all managers who miss their cost or benefit estimates by more than 10 percent.
C)recognize that the capital budgeting process is based on subjective estimates and that managers cannot control the actual project implementation.
D)promote project managers that have the largest project(s)or number of employees.
Q4) Discuss the advantages of using spreadsheets including sensitivity analysis.
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Page 10
Chapter 9: Profit Planning and Budgeting
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126 Flashcards
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Sample Questions
Q1) If management desires finished goods inventory to decrease over the period,what can be said about the relationship between units produced and units sold?
A)Units produced > units sold.
B)Units produced < units sold.
C)Units produced = units sold.
D)Nothing can be said without more information.
Q2) In profit planning and budgeting,which statement is true concerning a favorable variance?
A)A favorable variance would increase operating profit,holding all other things constant.
B)A favorable variance is always positive (good),holding all other things constant.
C)A favorable variance would decrease operating profit,holding all other things constant.
D)A favorable variance is always negative (bad),holding all other things constant.
Q3) Incentive compatible compensation schemes often create many opportunities as well as problems.Identify two negative outcomes of incentive compensation systems,and suggest how companies can overcome them.
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Chapter 10: Profit and Cost Center Performance Evaluation
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100 Flashcards
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Sample Questions
Q1) How are fixed manufacturing costs treated for managerial and external reporting purposes?
Q2) The production price (spending)variance is the difference between which of the following two costs?
A)Budgeted and applied costs.
B)Actual and budgeted costs.
C)Applied and actual costs.
D)Variable and budgeted costs.
Q3) For external reporting purposes,how are fixed manufacturing costs treated?
A)As period costs.
B)Expensed as incurred.
C)Period costs included in the value of inventory.
D)Product costs included in the value of inventory.
Q4) To help managers in their efforts to control overhead costs,managers and accountants analyze overhead variances using the variable cost variance model by separating variable overhead variances into
A)price and quality components.
B)economy and efficiency components.
C)price and efficiency components.
D)economy and effectiveness components.
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Chapter 11: Investment Center Performance Evaluation
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Sample Questions
Q1) What is a disadvantage of top management intervention in setting transfer prices between divisions?
A)Top management may become swamped with pricing disputes.
B)Division managers will lose the flexibility and other advantages of autonomous decision making.
C)The approach reduces the benefits of decentralization.
D)All of the answers are correct.
Q2) When measuring a division's operating costs,indirect controllable operating costs include
A)labor used in the division's production.
B)salary of the division manager (controlled by top management)
C)costs of providing centralized services,such as data processing and employee training.
D)company president's salary.
Q3) What transfer pricing basis is considered a good estimation of differential cost plus opportunity cost?
A)Market price-based transfer pricing
B)Variable cost-based transfer pricing
C)Fixed price-based transfer pricing
D)Fixed cost-based transfer pricing
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Chapter 12: Incentive Issues
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Sample Questions
Q1) Rewards that come from outside the individual,such as rewards from a teacher,a parent,an organization,or a spouse that include grades,money,praise,and prizes are called
A)traditional rewards.
B)intrinsic rewards.
C)extrinsic rewards.
D)outside rewards.
Q2) Describe two types of common financial fraud.
Q3) What is the focus of the agency view of motivation?
A)relationships between customers and agents.
B)Ways to discourage agents to act in the interests of principals.
C)Ways to encourage principals to act in the interests of agents.
D)Ways to encourage agents to act in the interests of principals.
Q4) What is a fundamental principle of internal control to prevent fraud?
A)Separate duties and responsibilities.
B)Require employee collusion.
C)Eliminate internal audits.
D)Eliminate independent audits.
Q5) Explain the role of the audit committee in deterring financial fraud.
Q6) Explain common causes of financial fraud.
Page 14
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Chapter 13: Allocating Costs to Responsibility Centers
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Sample Questions
Q1) Why are joint-process costs allocated?
Q2) Why do companies allocate common costs to departments and products?
Q3) Charley's Products allocates telephone expenses based on a variable rate of $1 per phone call.It allocates the fixed monthly charge equally over its budgeted usage.Able Division expected to make 300 telephone calls,but actually made 350.Baker Division expected to make 300 telephone calls,but actually made 250.Actual fixed costs for the month totaled $3,000.What are the amounts allocated to the two divisions using a dual rate of allocation?
A)Able Division = $2,259,Baker Division = $1,291
B)Able Division = $2,209,Baker Division = $1,391
C)Able Division = $1,850,Baker Division = $1,750
D)Able Division = $1,800,Baker Division = $1,800
Q4) Which of the following is a reason for using activity-based costing to allocate service department costs?
A)It can lead to improved allocation of service department costs to production departments.
B)It is required by generally accepted accounting principles.
C)It is required by the tax authorities.
D)All of the answers are correct.
Q5) How is activity-based costing used to allocate service department costs?
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