For the following multiple choice questions, select the best available answer. 28. SWOT analysis is a useful tool for a. evaluating the performance of an organization. b. identifying the organization’s critical success factors. c. developing the organization’s strategy map. d. developing the organization’s value chain. 29. The following strategy implementation technique can be particularly enhanced by using benchmarking, as, for example, participating in the Malcolm Baldrige National Quality Award program: a. the value chain. b. the balanced scorecard (BSC). c. the strategy map. d. execution. 30. The balanced scorecard is related to the strategy map in a way similar to how a. the value chain is related to product differentiation. b. SWOT analysis is related to execution. c. the organization’s key activities are related to the value chain. d. sustainability can be related to financial reporting. 31. A company taking a strategic and customer-centered point of view can best address sustainability, a concern for environmental and social as well as economic performance, through a. annual financial reporting to the Securities and Exchange Commission. b. the use of a sustainability perspective in the balanced scorecard. c. reporting violations of a company’s human resources policy to the proper authorities. d. lobbying in Congress for stronger environmental regulations. 32. The implementation of the balanced scorecard (BSC) can involve all of the following except a. the strong support of top management. b. a strategy of differentiation (as opposed to one of cost leadership). c. a link to reward and compensation systems. d. an accurate reflection of the organization’s strategy. 33. What does it mean for the balanced scorecard to “reflect strategy”? a. One should be able to infer an organization’s strategy from the balanced scorecard. b. The management accountant develops the balanced scorecard prior to developing a strategy. c. The balanced scorecard is one of the key methods for implementing strategy. d. One cannot have an effective strategy without an effective balanced scorecard. 34. Opportunities and threats in strengths-weaknesses-opportunities-threats (SWOT) analysis can be identified most readily by a. using value-chain analysis. b. analyzing the industry and the organization’s competitors. c. analyzing the organization’s critical success factors. d. using the strategy map. 35. Which of the following statements about the value chain is correct? a. The two phases of the activities of the value chain are the upstream activities and the downstream activities. b. A company need not operate in all activities of the value chain. c. There are usually six to eight activities in the value chain. d. The value chain is intended for manufacturers. 36. As opposed to identifying opportunities and threats, identifying a company’s strengths and weaknesses in SWOT analysis can involve all but which of the following? a. Careful analysis of the company’s sustainability statement b. Analysis of the company’s code of ethics c. Evaluation of the company’s operations, strategy, and management competence d. Review of the company’s industry and competitive environment 37. The required resources for implementing a cost leadership strategy include which of the following? a. Strong marketing capability b. Substantial capital investment and access to capital c. Effective product engineering and innovative design d. Reputation for high ethical standards 38. The World Resources Institute (WRI) is an organization that a. provides guidance for developing and benchmarking an organization’s value chain. b. provides resources for organizations that intend to expand globally c. provides guidance for organizations that want to develop indicators (ESGs) of the environmental component of sustainability. d. assists companies in understanding the changing environment of financial and material resources worldwide. 39. Which of the following is an important method for implementing strategy? a. Sustainability b. Value-chain analysis c. Cost leadership d. Differentiation
> Which of the following would not be a desirable outcome from an organization’s investments in quality? a. An increase in the sales return rate b. A decrease in warranty and service-related costs c. Higher product/service selling prices d. Reduced manufac
> Which of the following would not typically be associated with improved quality of a manufacturer’s output? a. Reduced manufacturing cost b. Higher levels of inventory holdings c. Faster throughput times d. Higher selling prices and increased revenues
> For a typical order, assume the following times (in hours): storage time (in between processes), 5.0; inspection time, 1.0; move time (from process to process), 2.0; and manufacturing (processing) time, 8.0. Given this information, what is the manufactur
> Nieto Machine Shop budgeted 4,000 labor hours and 8,000 machine hours used in May. Total budgeted overhead for May is $80,000. What is the overhead rate using labor hours and also using machine hours? Which would you pick and why?
> On average, the manufacturing (processing) time spent per order is approximately 4 days. In addition, a typical order spends 4 days moving from process to process, 3 days in storage, and 2 days in inspection. For an average order, what is the manufacturi
> A customer places an order on January 1. Ten days later, that order is received by the manufacturing department. Fifteen days later, the order is put into production. Processing (manufacturing) time is 20 days for this order. The completed order is then
> A customer’s order is delivered (received by the customer) on December 1, 2022. This order was placed with the company on September 1, 2022, and received by the manufacturing department on September 15, 2022. Actual production on the order began on Octob
> 17. In 2023, a manufacturing company instituted a total quality management (TQM) program producing the comparative report shown below: On the basis of this report, which one of the following statements is most likely correct? a. An increase in conforma
> Listed below are selected items from the cost of quality (COQ) report for Watson Products for last month: Category …………………………………………. Amount Rework ……………………………………………….. $ 725 Equipment maintenance ……………………….. 1,154 Product testing ………………………………………. 786 Fi
> Refer to the information in Brief Exercise 17-13. What is the expected average loss (cost) per unit, E(L(x)), based on a Taguchi quality loss function (QLF), if the manufacturing process is centered on the target specification with a standard deviation (
> Refer to the information in Brief Exercise 17-13. Calculate the estimated total quality loss (cost) when the measured quality characteristic, x (e.g., circumference, measured in inches), is 78. Round your answer to the nearest whole number. Brief Exerci
> Solidtronic Inc., an original equipment manufacturer (OEM), has a product specification of 75 ± 5 (i.e., T [the target value] = 75). The cost for warranty services (when the quality characteristic, x, is either 70 or 80) is estimated as $500 per unit. Wh
> Assume that a plasma TV company is working at a 3-sigma level of quality in terms of each of 100 component parts in each TV it manufactures. Because of the high price associated with these TV sets, the company defines a product defect as any unit with on
> Use the following information. McCall sells a gold-plated souvenir mug; McCall expects to sell 1,600 units for $45 each to earn a $25 contribution margin per unit. Janice McCall, president, expects the year’s total market to be 32,000 units. For the year
> A small consulting firm has an overhead rate of 200% of direct labor charged to each job. The materials cost (including travel and other direct costs) for a particular job is $10,000, and the direct labor is $20,000. What is the total job cost for this j
> Use the following information. McCall sells a gold-plated souvenir mug; McCall expects to sell 1,600 units for $45 each to earn a $25 contribution margin per unit. Janice McCall, president, expects the year’s total market to be 32,000 units. For the year
> Use the following information. McCall sells a gold-plated souvenir mug; McCall expects to sell 1,600 units for $45 each to earn a $25 contribution margin per unit. Janice McCall, president, expects the year’s total market to be 32,000 units. For the year
> Use the following information. CompuWorld sells two products, R66 and R100, and calculates sales variances using the contribution margin. Pertinent data for the current year follow: What is the R66 sales quantity variance?
> Use the following information. CompuWorld sells two products, R66 and R100, and calculates sales variances using the contribution margin. Pertinent data for the current year follow: What is the total sales volume variance?
> Use the following information. CompuWorld sells two products, R66 and R100, and calculates sales variances using the contribution margin. Pertinent data for the current year follow: What is the R100 sales mix variance?
> Darwin Inc. provided the following information: Budgeted production …………………….. 10,000 units Actual production ………………………..…. 9,500 units Budgeted input ……………………………. 9,750 gallons Actual input …………………………………. 8,950 gallons What is the partial operational
> Refer to the journal entries made in Brief Exercise 15-22. Provide an appropriate end-of-year closing entry for each of the following two independent situations: (a) the net factory overhead cost variance is closed entirely to Cost of Goods Sold (COGS)
> Refer to the variances you calculated in conjunction with Brief Exercise 15-21 and to the information in Brief Exercises 15-16 and 15-18. Prepare the appropriate journal entries to record (a) actual factory overhead costs for the year, (b) the applied
> Refer to the information in Brief Exercise 15-16. Calculate and label the following factory overhead variances for the year: (a) total overhead cost variance, (b) total flexible budget variance, and (c) production volume variance. Round each answer to
> As an extension of Brief Exercise 15-19, assume that at the end of the year, management of Patel and Sons decides that the overhead cost variances should be allocated to WIP Inventory, Finished Goods Inventory, and Cost of Goods Sold (COGS) using the fol
> Montross Lumber processes wood to be shipped to construction companies. In order to keep their products uniform, they conduct inspections on 20% of the boards produced. Inspections cost the company $10 per hour and it takes one minute to inspect each boa
> Refer to your answers to Brief Exercises 15-16 and 15-17 and the journal entries made in conjunction with Brief Exercise 15-18. Given this information, provide the appropriate journal entries (a) to record the overhead cost variances for the period (the
> Refer to the data in Brief Exercise 15-16. Provide the correct summary journal entries for actual and applied factory overhead costs (both variable and fixed) for the year. Assume that the company uses a single account, Factory Overhead, to record both a
> Refer to the data in Brief Exercise 15-16. Given this information, what was (a) the variable overhead spending variance for the year and (b) the variable overhead efficiency variance for the year? Round answers to the nearest whole dollar; indicate whe
> Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhe
> Baxter Corporation’s master budget calls for the production of 5,000 units per month and $144,000 indirect labor costs for the year. Baxter considers indirect labor as a component of variable factory overhead cost. During April, the company produced 4,50
> Sipple Furniture’s master budget for the year includes $360,000 for fixed supervisory salaries. Practical capacity, which is used to set the fixed overhead allocation rate, is 500 units per month. Supervisory salaries are expected to be incurred uniforml
> Refer to the data in Brief Exercise 14-21. (a) What was the direct labor rate variance for the month, rounded to 2 decimal places? (b) Was this variance favorable or unfavorable? Brief Exercise 14-21: Mom’s Apple Pie Company uses a standard cost syst
> Mom’s Apple Pie Company uses a standard cost system. The standard direct labor time for each pie is 10 minutes. During the most recent month, the company produced and sold 6,000 pies. The standard direct labor rate is $8 per hour; the actual labor rate p
> Refer to Exhibit 14.8 and the accompanying discussion in the text. Demonstrate that the flexible budget variance for PVC during October 2022 was $1,680F. Exhibit 14.8:
> Refer to Exhibit 14.8 and the accompanying discussion in the text. Demonstrate that the purchase price variance for PVC during October 2022 was $720U. Exhibit 14.8:
> Tasty Beverage Co. produces soft drinks, specializing in fruit drinks. They produce 5,000 cans of product per batch. Setup cost for each batch is $50 and each drink costs $0.10 to produce. What is the total cost per batch? How much would it cost to fill
> Refer to Exhibit 14.8 and the accompanying discussion in the text. Demonstrate that the materials usage variance for PVC during October 2022 was $2,400F. Exhibit 14.8:
> Chapman Inc. sells a single product, Zud, which has a budgeted selling price of $24 per unit and a budgeted variable cost of $12 per unit. Budgeted fixed costs for the year amount to $45,000. Actual sales volume for the year (47,000 units) fell 3,000 uni
> Davidson Corp. produces a single product: fireproof safety deposit boxes for home use. The budget going into the current year anticipated a selling price of $55 per unit. Because of competitive pressures, the company had to cut selling prices by 10% duri
> The Ace Company sells a single product at a budgeted selling price per unit of $20. Budgeted fixed manufacturing costs for the coming period are $10,000, while budgeted fixed marketing expenses for the period are $24,000. Budgeted variable costs per unit
> Edwards and Bell market a single line of home computers, dubbed the XL-98. The master budget for the coming year contained the following items: sales revenue, $400,000; variable costs, $250,000; fixed costs, $100,000. Actual results for the year were as
> The Baldwin Company, in its master budget for 2022, predicted total sales of $160,000, variable costs of $48,000, and fixed costs of $52,000 ($24,000 manufacturing and $28,000 nonmanufacturing). Actual sales revenue for 2022 turned out to be $180,000. Ac
> Why do prices at theme parks in Orlando, Florida, remain high despite seasonal and economic cyclical ups and downs? What type of strategic pricing is used by these theme parks?
> If customer demand is 200,000 units per month, and available manufacturing capacity is 6,000 hours per week, what is the Takt time for this firm?
> Name three professional cost management organizations and explain their roles and objectives.
> What does the term cost management mean? Who in the typical firm or organization is responsible for cost management?
> Give three examples of firms you believe would not be significant users of cost management information and explain why.
> Give four examples of firms you believe would be significant users of cost management information and explain why.
> 26. Management accounting, as defined by the IMA, uses the expertise of the management accountant to a. Improve quality and reduce cost b. Implement a strategy of cost leadership or differentiation c. Implement a tactic of customer value and shareholder
> 21. Direct materials are 22. Which of the following costs would be included in manufacturing overhead for a computer manufacturer? a. The cost of the USB port hardware b. The wages paid to hardware assemblers c. The cost of the circuit boards d. Deprec
> What are the two types of bonus pools for bonus incentive plans? How do they differ, and how does each achieve (or not achieve) the three objectives of management compensation?
> Identify and explain the six financial ratios used to evaluate liquidity as part of the firm’s business analysis.
> List the three bases for bonus incentive plans; explain how they differ and how each achieves (or does not achieve) the three objectives of management compensation.
> If Toyota Motor Company receives an order on May 1, begins production on May 19, and ships the order on May 20 immediately following production, then what is the manufacturing cycle efficiency (MCE) ratio?
> From a tax planning standpoint, what form of compensation is least desirable for the manager? For the firm?
> From a financial reporting standpoint, what form of compensation is most desirable for the firm?
> Explain how management compensation can provide an incentive to unethical behavior. What methods can be used to reduce the chance of unethical activities resulting from compensation plans?
> Explain how a manager’s risk aversion can affect decision making and how compensation plans should be designed to deal with risk aversion.
> Explain the three types of management compensation.
> How does the firm’s management compensation plan change over the life cycle of the firm’s products?
> Why do you think it is important for a management accountant to be able to complete an evaluation of the firm that is separate from an evaluation of individual managers?
> What type of management compensation is the fastest growing part of total compensation? Why do you think this is the case?
> Explain the different business valuation methods. Which method do you think is superior? Why?
> Develop arguments to support your view as to whether executive pay in the United States is too high.
> If a customer order is placed on May 1, the company expects to begin processing it on May 10, and the order is shipped on May 20, the manufacturing cycle time is then how many days long?
> Brief Exercises 7-15 and 7-16 require the following information: What percentage of S1’s costs is allocated to P1 and to P2 under the direct method?
> List the four types of bonus payment options and explain how they differ. How does each achieve (or not achieve) the three objectives of management compensation?
> Identify and explain the three objectives of management compensation.
> What is meant by the term arm’s length standard, and for what is it used?
> What are the three methods most commonly used in international taxation to determine a transfer price acceptable to tax authorities? Explain each method briefly.
> How does the concept of economic value added, EVA®, compare, as a measure of financial performance, to return on investment (ROI) and residual income (RI)?
> What are the advantages and limitations of residual income (RI) as a performance measure?
> What are the components of return on investment (ROI), and how is each component interpreted and used?
> What are the advantages and limitations of return on investment (ROI) as a performance measure?
> What are the measurement issues to consider when using return on investment (ROI)?
> What is return on investment (ROI), and how is it calculated?
> Comdex Inc. manufactures parts for the telecom industry. One of its products that currently sells for $160 is now facing a new competitor that offers the same product for $140. The parts currently cost Comdex $130. Comdex believes it must reduce its pric
> What does expropriation mean, and what is the role of transfer pricing in this regard?
> What is meant by the term investment center? How is the financial performance of investment centers measured?
> What is the role of cost allocation in strategic performance measurement?
> What are some important behavioral and implementation issues in strategic performance measurement? How does the management accountant deal with these issues?
> Because full costing is accepted for financial reporting purposes and variable costing is not, why should we be concerned about the difference between them? What is the difference, and why is it important?
> What are four types of SBUs, and what are the goals of each?
> Name two types of organizational design and explain how they differ.
> Explain the difference between informal and formal control systems. What type of control system is strategic performance measurement?
> Does an effective performance evaluation focus on individual or team performance?
> What is strategic performance measurement, and why is it important for effective management?
> The firm in Brief Exercise 13-20 ignores competitive prices because it has a differentiated product. It uses life-cycle cost–based pricing with a 10 percent markup. What is the firm’s price?
> Explain the difference between the engineered-cost and discretionary-cost approaches to evaluating support departments.
> What is the role of risk preference in performance evaluation?
> Which type of cost center has a planning focus, and which type has an evaluation focus?
> Can the marketing department be both a revenue center and a cost center? Explain.
> How do centralized and decentralized firms differ? What are the advantages of each?
> In what situations is a cost center most appropriate? A profit center? A revenue center?
> Can strategic performance measurement be used for service firms and not-for-profit organizations? How?
> What are the differences among performance evaluation, management control, and operational control?
> Of the four categories in a typical COQ report, which category of quality cost is the most damaging to the organization? Why is this the case?
> What functions does a cost of quality (COQ) report play in a quality improvement program?
> The firm in Brief Exercise 13-20 ignores competitive prices because it has a differentiated product. It uses full manufacturing cost–based pricing with a 40 percent markup. What is the firm’s price?
