Cost pre-exam 1

Which of the following statements best define strategy? 
A. It is an​ organization's ability to achieve lower costs relative to competitors through productivity and efficiency​ improvements, elimination of​ waste, and tight cost control.
B. It describes how an organization can create value for its customers while differentiating itself from its competitors.
C. It is an​ organization's ability to offer products or services its customers perceive to be superior and unique relative to the products or services of its competitors.
D. It describes how an organization motivates its employees to work for more hours without any increase in their wages.

Which of the following statements best define a product differentiation​ strategy?
A. It describes how an organization can increase customer base by differentiating​ its' product prices from its competitors.
B. It is an​ organization's ability to offer products or services its customers perceive to be superior and unique relative to the products or services of its competitors.
C. It is an​ organization's ability to achieve lower costs relative to competitors through productivity and efficiency​ improvements, elimination of​ waste, and tight cost control.
D. It describes how an organization can decrease product prices by differentiating​ its' raw materials from its competitors.

What is the term for an​ organization's ability to achieve lower costs relative to competitors through productivity and efficiency​ improvements, elimination of​ waste, and tight cost​ control?
A. Product differentiation
B. Marketing strategy
C. Competitor differentiation
D. Cost leadership

An organization that is using the cost leadership approach would​ ________.
A. provide products at a higher cost than competitors
B. bring products to market rapidly
C. focus on productivity through efficiency improvements
D. incur costs for innovative​ R&D

Magic Corporation manufactures water toys. It plans to grow by producing​ high-quality water toys that are delivered in a timely manner. There are a number of other manufacturers who produce similar water toys. Magic believes that continuously improving its manufacturing processes and​ re-engineering processes to downsize and eliminate excess capacity are critical to implementing its strategy. Which of the following best describes​ Magic's strategy?  
A. cost leadership
B. cost differentiation
C. product differentiation
D. product leadership

Which of the following efforts would most likely yield the greatest​ re-engineering benefits?
A. focusing on a single activity to determine if it is necessary
B. increasing costs of all inputs used to increase total factor productivity  D.decreasing quantity of output produced to increase total factor productivity
C. focusing on entire processes and elimination of unnecessary activities and tasks

The fundamental rethinking and redesign of business processes to achieve improvements in critical measures of​performance, such as​ cost, quality,​ service, speed, and customer satisfaction is​ ________.
A. reengineering
B. controlling
C. directing
D. structuring

The first step to successful balanced scorecard implementation is clarifying the​________.
A. ​organization's vision and strategy
B. objectives of all four balanced scorecard measurement perspectives
C. ​owner's expectations about return on investment
D. elements that pertain to​ value-added aspects of the business

Which of the following statements is true of the​ internal-business-process perspective of a balanced​ scorecard?
A. ​Internal-business-process improvement targets are often determined after benchmarking against an​ organization's main competitors standards.
B. ​Internal-business-process perspective is composed of three​subprocesses: innovation​ process; learning-and-growth​ process; and post​ sales-service process.
C. ​Internal-business-process perspective is composed of three​subprocesses: operations​ process; learning-and-growth​ process; and post​ sales-service process.
D. ​Internal-business-process perspective evaluates the profitability of the strategy and the creation of shareholder value.

Which of the following questions best relates to the balanced​ scorecard's internal business processes​ perspective?
A. How do we streamline operations to lower costs to increase​ profits?
B. How can we increase our market​share?
C. How can our processes be executed in such a way as to increase value to​customers? 
D. How do we motivate employees so that they can become more​productive?

A​ company's balanced scorecard measures​yield, order-delivery​ time, cycle​ time, and errors as part of which of the following​perspectives?
A. Customer
B. ​Internal-business-process 
C. ​Learning-and-growth
D. Financial

In a strategy​ map, a strategic objective where many ties spur out from it resulting in the achievement of many strategic objectives is​called:
A. distinctive objectives
B. focal points
C. trigger point
D. orphan objectives

Which of the following statements is a disadvantage of balanced​ scorecards?A.Balanced scorecards are of little use in influencing managerial behavior.
B.Balanced scorecards use a lot of nonfinancial measures.
C.Balanced scorecards ignore​ short-run objectives.
D.Balanced scorecards may become unwieldy and difficult to understand.

Which of the following statements is true of strategic analysis of operating​ income? A.Management accountants compare actual operating performance of one year and budgeted operating performance of another year.
B.Management accountants compare budgeted operating performance over two different periods.
C.Management accountants compare actual operating performance over two different periods.
D.Management accountants compare actual and budgeted operating performance over the same time periods.

Successful implementation of a product differentiation strategy will result in​ ________.
A. a large favorable productivity and growth components
B. a large favorable growth and​price-recovery components
C. a large favorable​ price-recovery and productivity components
D. only a large favorable growth component

Which of the following statements is true of strategic analysis of operating​ income?A.Subdividing the change in operating income to evaluate the success of a strategy has no similarity to the variance analysis.
B.Management accountants compare actual and budgeted operating performance over the same time periods.
C.Change in operating income from one period to any future period can be subdivided into product​differentiation, cost​ leadership, and growth components.
D.It focuses on differences in individual categories of costs​(direct materials, direct manufacturing​ labor, and​overheads).

Sunk costs​ ________.
A. are ignored when evaluating alternatives 
B. are relevant
C. are differential
D. have future implications

When making decisions​ ________.
A. appropriate weight must be given to both quantitative and qualitative factors 
B. more weight should be given to quantitative factors
C. qualitative factors are not relevant as they​ can't be quantified
D. quantitative factors are relevant but qualitative factors are rarely relevant

When evaluating a makeminus−orminus−buy ​decision, which of the following needs to be​considered? A.alternative uses of the production capacity 
B.pension costs to the current employees
C.material−handling costs that cannot be eliminated
D.the original cost of the production equipment

Colonial North​ Manufacturing, Inc. is considering eliminating one of its product lines. The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance. What financial effects occur if the product line is​discontinued?
A. the​ company's total fixed costs will decrease by the amount of the product​ line's fixed costs
B. net income will decrease by the amount of the product​ line's fixed costs
C. the​ company's total fixed costs will increase by the amount of the contribution margin of the product line being discontinued
D. net income will decrease by the amount of the contribution margin of the product line being discontinued

Crimson​ Services, Inc., employs 8 individuals. They are all paid​ $16.50 per hour. How would total costs of personnel be​ classified?
A. variable cost
B. irrelevant cost
C. fixed cost
D. mixed cost

Which of the following functions represents the least total cost assuming the number of units is equal in each​ case?
A. y​ = 180​ + 9X
B. y​ = 180​ + 5X
C. y​ = 90​ + 5X 
D. y​ = 90​ + 9X

Place the following steps in order for estimating a cost function using quantitative analysis.
A​ = Plot the data
B​ = Collect data on the dependent variable and the cost driver.
C​ = Choose the dependent variable
D​ = Identify the independent​ variable, or cost driver
E​ = Estimate the cost function
A. C D B A E
B. E D C B A
C. A D C E B
D. D C E A B

When using the​ high-low method, the numerator of the equation that determines the slope is the​ ________.
A. difference between the fixed cost and variable cost associated with the cost driver
B. difference between the high and low observations of the cost driver
C. difference between the positive and negative values of dependent and independent variables
D. difference between the costs associated with highest and lowest observations of the cost driver 

The slope of the line of regression is the​________.
A. difference between the fixed cost and variable cost associated with the cost driver
B. difference between actual cost and estimated cost for each observation of the cost driver
C. rate at which the independent variable varies
D. rate at which the dependent variable varies 

Which of the following statements is true of​activity-based costing?
A. There is a clear​ cause-and-effect relationship between costs and the cost driver in the long run.
B. The system focuses on activities in together and not on individual activities.
C. A single cost driver should be identified for all the activities.
D. There is no variety of cost drivers and cost pools.

A step​ variable-cost function​ ________.
A. example includes adding additional warehouse space
B. is fixed over the long run but not over the short run
C. is often approximated with a continuous​ variable-cost function 
D. remains the same over a wide range of activity

The​ learning-curve models presented in the text examine​ ________.
A. the change in variable costs when quantity discounts are available
B. how setup costs decline as more workers are added
C. how efficiency increases as more units are produced 
D. how quality increases over time

Data collection problems arise when​________.
A. ​accrual-basis costs are used rather than​ cash-basis costs
B. fixed and variable costs are not separately identified and both are allocated to products on a per unit basis 
C. purely inflationary price effects are removed
D. data are recorded electronically rather than manually

Which of the following statements is of true engineered​ costs?
A. They include​ advertising, executive​training, and​ R&D.
B. They have a​ detailed, physically​observable, and repetitive relationship with output.
C. They arise from periodic​ (usually annual) decisions regarding the maximum amount to be incurred.
D. They have high level of uncertainty.

Conversion costs are an example of​________.
A. direct engineered costs
B. indirect engineered costs 
C. discretionary costs
D. unused capacity costs

At the Spring Valley​ Company, the cost of the personnel department has always been charged to production departments based upon number of employees.​ Recently, opinions gathered from the department managers indicate that the number of new hires might be a better predictor of personnel costs. Which cost estimation method is being used by Spring Valley​ Company?
A. the conference method 
B. the simple regression method
C. the marginal costing method
D. the account analysis method