Professional Documents
Culture Documents
Collect data
yes
yes
no
yes
ANSWER:
2.
EASY
ANSWER:
EASY
Who of the following are external users of data gathered by a management information
system?
a.
b.
c.
d.
Creditors
yes
no
no
yes
ANSWER:
4.
3.
Regulatory Bodies
no
no
yes
yes
Suppliers
yes
no
yes
yes
EASY
operator
communications network
effector
assessor
ANSWER:
EASY
21
22
5.
Chapter 2
computer program
source document
variance report
all of the above
ANSWER:
6.
EASY
sensor
assessor
effector
detector
ANSWER:
EASY
ANSWER:
9.
EASY
ANSWER:
8.
7.
EASY
ANSWER:
EASY
Chapter 2
10.
ANSWER:
11.
ANSWER:
EASY
ANSWER:
13.
EASY
12.
EASY
ANSWER:
EASY
24
14.
Chapter 2
ANSWER:
15.
Cost accounting
system
no
yes
yes
yes
Cost management
system
yes
no
yes
no
EASY
a.
b.
c.
d.
Strategic resource
management
no
no
yes
yes
ANSWER:
Core competency
assessment
yes
no
no
yes
Centralized
management
yes
no
yes
no
EASY
Which of the following organizational characteristics critically affect the design of a cost
management system?
a.
b.
c.
d.
ANSWER:
18.
EASY
Financial accounting
system
no
yes
no
yes
ANSWER:
17.
a.
b.
c.
d.
16.
EASY
Mission
Form
yes
yes
no
yes
yes
no
yes
no
Chapter 2
a.
b.
c.
d.
is finalized when the information currently being produced is the same as the
information currently desired.
can be generically designed to fit the information needs of the majority of domestic
(but not global) organizations.
must be continuously improved to adapt to changes in an organizations internal
and external environment.
that has been appropriately designed from gap analysis, does not need to be
changed unless there is a change in organizational management or culture.
ANSWER:
19.
MEDIUM
of limited need because costs are typically passed along to customers via the rate
structure.
essential because of the need to provide the highest degree of cost efficiency
possible for customers.
critical to the needs of empowered employees making decisions at various levels
of the organizational hierarchy.
of no use because there is no attempt by management to control costs.
ANSWER:
20.
EASY
ANSWER:
EASY
26
21.
Chapter 2
Which of the following indicates the mission being pursued by a subunit that is
a.
b.
c.
d.
using cash?
save
build
harvest
build
ANSWER:
22.
c.
d.
MEDIUM
is only possible if a company has formed strategic alliances with its suppliers.
generally increases long-run product costs because of the need to develop new
production processes.
results in the ability of a firm to pursue a cost leadership competitive strategy.
may result in design flaws, a need for engineering change orders, and customer
bad will.
ANSWER:
EASY
ANSWER:
24.
generating cash?
harvest
save
build
harvest
23.
MEDIUM
Training costs
yes
no
yes
no
ANSWER:
Assembly time
yes
yes
yes
no
Chapter 2
25.
ANSWER:
26.
b.
c.
d.
ANSWER:
EASY
Which of the following limits an organizations ability to minimize the gaps found when
a gap analysis has been performed?
a.
b.
c.
d.
Limited resources
yes
yes
no
no
ANSWER:
28.
EASY
27.
Number of managers
yes
no
yes
no
Technology capabilities
yes
yes
no
yes
EASY
Which of the following is considered a feeder system to the cost management system?
a.
b.
c.
d.
Payroll
yes
yes
no
yes
ANSWER:
Budgeting
no
yes
no
yes
b
EASY
Inventory valuation
yes
yes
no
no
28
29.
Chapter 2
Information
yes
no
yes
yes
ANSWER:
30.
Motivation
yes
yes
no
yes
Evaluation
yes
no
yes
no
EASY
Cost behavior
analysis
yes
no
yes
yes
ANSWER:
VA/NVA activity
identification
yes
yes
no
yes
Assignment of joint
costs to joint products
yes
yes
no
no
EASY
Kaizen
Differentiation
Confrontation
Cost leadership
ANSWER:
32.
Reporting
yes
yes
no
yes
a.
b.
c.
d.
31.
EASY
Differentiation
yes
yes
yes
no
ANSWER:
Cost leadership
no
yes
no
yes
EASY
Confrontation
yes
yes
no
yes
Chapter 2
33.
product features.
low prices.
just-in-time production capabilities.
short-run opportunities for cost minimization.
ANSWER:
34.
differentiation
cost leadership
confrontation
price fixing
ANSWER:
EASY
Quality
yes
yes
no
no
ANSWER:
36.
EASY
35.
Decentralization
yes
no
yes
no
b
Responsiveness to change
no
yes
yes
no
EASY
In a decentralized organization,
a.
b.
c.
d.
all functions are delegated to subunit managers who are closest to the information.
subunits under the control of a single manager are normally grouped by
organizational structure.
it would be difficult to group geographically related subunits pursuing different
missions under the same manager.
functions such as financing and product/service pricing are typically retained by top
management.
ANSWER:
EASY
210
37.
Chapter 2
Decision-making authority
no
yes
no
yes
ANSWER:
38.
Taxation
yes
yes
no
no
Mission
yes
no
yes
no
EASY
ANSWER:
EASY
The performance measurement system should encourage each manager to act in a manner
that
a.
b.
c.
d.
ANSWER:
40.
Cost of capital
yes
yes
yes
yes
39.
EASY
Performance reports are useful only to the extent that performance is measured against
a.
b.
c.
d.
a meaningful benchmark.
the performance of all other units or managers.
the budget as adopted for the period.
competitors achievements.
ANSWER:
EASY
Chapter 2
41.
Planning
yes
no
no
yes
ANSWER:
42.
Evaluating performance
no
no
yes
yes
EASY
kaizen costing.
reverse engineering.
computer simulation.
all of the above.
ANSWER:
EASY
The reward system for subunit managers of mature businesses should emphasize
a.
b.
c.
d.
ANSWER:
44.
Controlling
yes
yes
no
yes
Relating resource consumption and cost to alternative product and process designs can be
achieved through
a.
b.
c.
d.
43.
EASY
ANSWER:
EASY
212
45.
Chapter 2
ANSWER:
46.
MEDIUM
motivational
informational
reporting
all of the above
ANSWER:
EASY
Focus on cost control and assessing core competencies are part of which cost management
element?
a.
b.
c.
d.
motivational
informational
reporting
all of the above
ANSWER:
48.
Performance measurements and a reward system are part of which cost management
element?
a.
b.
c.
d.
47.
EASY
Which of the following should be able to provide the financial information needed for
budget preparation?
a.
b.
c.
d.
Cost management
system
no
no
yes
yes
ANSWER:
EASY
Financial accounting
system
yes
yes
no
yes
Cost accounting
system
yes
no
yes
yes
Chapter 2
49.
ANSWER:
50.
b.
c.
d.
EASY
ANSWER:
MEDIUM
ANSWER:
52.
51.
EASY
a.
b.
c.
d.
Cost
principles
yes
no
no
yes
ANSWER:
Personnel
training principles
yes
yes
no
no
EASY
Investment
management principles
yes
yes
no
yes
214
Chapter 2
SHORT ANSWER/PROBLEMS
1.
2.
Define a cost management system and indicate how it should help managers.
ANSWER:
A cost management system is a set of formal methods developed for
planning and controlling an organizations cost activities relative to the goals and
objectives of the organization. A cost management system should determine how effective
and efficient the organizations activities are and identify the cost of resources consumed in
performing these activities. The system should also identify and evaluate any new activities
that may improve future performance of the organization while being aware of the
changing environment in which the business operates.
MEDIUM
3.
Discuss from where an organization receives information and what happens to information
within an organization.
ANSWER:
An organization receives information from its external operating
environment that includes the following: competition, suppliers, creditors, and the
government. This information is then circulated throughout the organization in both a
vertical and horizontal direction. The information gathered by the organization is used for
planning, decision making, evaluating performance, and controlling within the
organization.
MEDIUM
Chapter 2
4.
Discuss the characteristics of an organization for which a true cost management system
would be appropriate.
ANSWER:
The organization for which a true CMS would be appropriate would have
specified strategic goals to which its operating position is linked. Its technology, human
behavior, and information systems would be integrated as would its managerial and
operating systems. The organization would engage in intergroup coordination and
coordinated management through employee empowerment. A focus would be on cost
elimination rather than cost allocationthus implying an activity-based management
approach. Performance evaluation would rely on both financial and nonfinancial
measurements. Finally, the company would utilize changing technologies and embrace
customer values and customer satisfaction as part of organizational culture. This
organization would be confronting high-quality worldwide competition.
MEDIUM
5.
What are the six primary goals of a cost management system? Illustrate how a CMS
achieves each of these goals.
ANSWER:
The six goals of a cost management system are (1) to develop fairly
accurate product costs by using cost drivers, (2) to assess product and/or service life-cycle
performance, (3) to improve understanding of activities and processes, (4) to control
costs, (5) to measure performance, and (6) to pursue organizational strategies. The
illustrations given by the students should support details provided from pages 4548 in the
text.
MEDIUM
6.
List and discuss the four stages in the design of a cost management system.
ANSWER:
The four stages in designing a cost management system are (1) analyze,
(2) determine, (3) perform, and (4) assess. In the first stage, organizational structure,
culture, and form must be analyzed, as well as the mission and critical success factors of
the organization. The second stage involves determining what outputs are desired while
considering motivational, informational, and reporting elements of the organization. The
third stage involves performing gap analysis between desired output and current output.
The fourth stage is to assess the improvements generated by reducing the gap.
MEDIUM
216
7.
Chapter 2
Define confrontation strategy and indicate why many companies may believe it is the only
way to face competitors.
ANSWER:
Confrontation strategy means that a company, while attempting to
differentiate its products or becoming a low-cost producer, meets the competition head-on
knowing that any competitive advantage will last only a short time. Confrontation may
become the way of the future because of decreased product life cycles (companies are
better at reverse engineering and continuous improvement than in the past).
MEDIUM
8.
Name five items that would be considered critical success factors by most world-class
companies. Why is each of these factors so important to organizational longevity?
ANSWER:
The five items most commonly named are timeliness (time-to-market),
quality, customer service, efficiency/cost control, and responsiveness to change. Each
student will have different ideas as to why these items are important, but the answer
should address the global business environment and thus, the increase in competition,
reduction in product life cycles, costs to obtain versus retain customers, litigation issues,
and so forth.
MEDIUM
9.
What are five ways that an organization could reduce product costs? Provide an example
of how each method would cause cost reduction.
ANSWER:
The answer could include any of the following: (1) developing new
production processes, (2) capture learning curve and experience data, (3) increase
capacity, (4) use a focused factory arrangement, (5) design products for manufacturability,
(6) design products for logistical support, (7) design products for reliability, (8) design
products for maintainability, and (9) use advanced technology in manufacturing products.
Examples will differ by student.
MEDIUM
Chapter 2
10.