(完整版)管理会计示范性双语课件习题09

管理会计示范性双语课件习题07CHAPTER 7MANAGEMENT ACCOUNTING AND CONTROLSYSTEMS: ASSESSING PERFORMANCE OVER THEVALUE CHAINTRUE/FALSE1. A system is in control if it is on the path to achieving its strategicobjectives.a. Trueb. False2. For the process of control to have meaning, the organization must beable to identify and correct out-of-control situations.a. Trueb. False3. The same basic control process applies to all industries.a. Trueb. False4. One key difference in the control process lies in determining the mostappropriate types of performance measures for each company.a. Trueb. False5. The control function in management accounting focuses on discipliningemployees who do not meet targeted production levels.a. Trueb. False6. The scope of a well-designed management accounting and controlsystem should be on manufacturing rather than on the entire value chain.a. Trueb. False7. A well-designed management accounting and control system shouldprovide a consistent framework across the organization and yet allow flexibility to accommodate the local needs of each division.a. Trueb. False8. Total-life-cycle costing manages costs along the entire value chain.a. Trueb. False9. Deciding how to allocate organizational resources over the life cycle isprimarily determined during the manufacturing stage.a. Trueb. False10. The proportion of costs incurred during each stage of the product lifecycle varies by industry.a. Trueb. False11. Deciding how to allocate resources over the life cycle is usuallydecided once at the beginning of the design phase.a. Trueb. False12. To be profitable, a company must generate revenues to cover costsincurred throughout the entire value chain.a. Trueb. False13. By some estimates, 10-15% of product’s total life costs are committedduring the research, development, and engineering cycle.a. Trueb. False14. Spending more on the design phase of a new product usually reducessubsequent product-related costs.a. Trueb. False15. One goal of target costing is to design costs out of products during theresearch, development, and engineering stage of the product life cycle.a. Trueb. False16. Target costing starts by estimating expected product costs.a. Trueb. False17. Suppliers play a key role in the success of target costing.a. True18. Supply chain management may result in buyers and suppliers sharinginformation about each other’s companies.a. Trueb. False19. Guiding the target costing process is a cross-functional team made upof individuals from within and from outside the organization.a. Trueb. False20. One concern of target costing is that even though the target cost mightbe met, increased development time may cause the product to come late to market.a. Trueb. False21. Target costing uses the total-life-cycle concept by making it a key goalto minimize the cost of ownership.a. Trueb. False22. Target costing is a comprehensive approach to profit planning and costmanagement.a. Trueb. False23. Kaizen costing offers more opportunity to affect change than targetcosting.b. False24. Employee burnout is a problem for Kaizen costing but not for targetcosting.a. Trueb. False25. The goal of target costing is to reduce costs through small, incrementalchanges.a. Trueb. False26. Kaizen costing assumes engineers and managers possess the bestknowledge to improve processes and reduce costs.a. Trueb. False27. Kaizen costing requires relevant financial results to be shared withfront-line employees.a. Trueb. False28. Environmental costing computes the cost effects an organization hason the environment.a. Trueb. False29. Benchmarking partners should be within the same industry.a. TrueMULTIPLE CHOICE30. Which BEST describes the control function in a managementaccounting and control system?a. MACS seeks out areas that are out-of-control for correctiveaction.b. MACS achieves cost reduction targets that are continuallyadjusted downward.c. MACS guides and motivates employees to achieve organizationalobjectives.d. MACS ensures performance standard goals are being met.31. For the process of control to have meaning and credibility, the BESTresponse is:a. the organization must have the ability to correct situations that itidentifies as out-of-controlb. a consistent framework must be applied globally across theorganizationc. reports need to be generated that are both timely and accurated. information must be gathered about the best practices of others32. Which of the following is NOT true regarding a control system?a. A control system includes developing organizational objectivesand executing a plan for implementation.b. A control system includes monitoring the current level ofperformance and comparing it to the planned level of performance.c. The same performance measures apply to all organizations.d. The basic control process applies to all organizations.33. The process of keeping an organization in control consists of thefollowing five stages:a. research and development, design, manufacturing, marketing, andserviceb. research and development, design, manufacturing, distribution,and disposalc. planning, design, manufacturing, marketing, and benchmarkingd. planning, execution, monitoring, evaluation, and correcting34. A management accounting and control system is in control if it is onthe path:a. to achieving its strategic objectivesb. to implementing a planc. to developing objectivesd. to measuring performance35. Which BEST describes the purpose of a management accounting andcontrol system (MACS)?a. A MACS defines the value chain and identifies nonvalue-activities for a business.b. A MACS helps decision makers determine whether strategies andobjectives are being met.c. A MACS offers a system of controls to ensure employees aremeeting predetermined standards.d. A MACS provides a signal for management attention whenareas are out-of-control.36. A well-designed management accounting and control system assessesperformance:a. primarily in the actual production processb. primarily in the research, development, and engineering cyclec. primarily in the post-sales service and disposal cycled. over the entire value chain of activities37. The two major categories of technical considerations for amanagement accounting and control system are:a. design and accuracyb. relevance and scopec. service and timely informationd. development and flexibility38. Relevance of information includes providing all of the followingEXCEPT:a. the most accurate information possibleb. a global framework that can be applied uniquely to eachor unitc. feedback on performance measures in a timely fashiond. different costing methods for each division39. The scope of management accounting and control system technicalconsiderations should include:a. the performance of suppliersb. design activitiesc. the actual production processd. All of the above are correct.40. Information is relevant if:a. it can be applied in a flexible mannerb. it is inaccuratec. it is inconsistentd. it is late41. By some estimates, 80% to 85% of a product’s total life costs arecommitted by decisions made during the __________ cycle.a. research, development, and engineeringb. manufacturingc. post-sale service and disposald. operating42. The characteristic of a management accounting and control system thatallows employees to customize applications for local decisions isreferred to as being:a. timelyb. flexiblec. accurated. in control43. The characteristic of a management accounting and control system thatmeans the language used and the technical methods applied do notconflict within various parts of the organization is referred to as being:a. in controlb. accuratec. consistentd. Kaizen44. For most products, the majority of costs are incurred during the:a. research, development, and engineering cycleb. manufacturing cyclec. post-sale service and disposal cycled. operating cycle45. Facilities layout and just-in-time manufacturing help reduce costsincurred during the:a. research, development, and engineering cycleb. manufacturing cyclec. post-sale service and disposal cycled. operating cycle46. Total-life-cycle costing is the name given to:a. a method of cost planning to reduce manufacturing costs totargeted levelsb. the process of examining each component of a product todetermine whether its cost can be reducedc. the process of managing all costs along the value chaind. a system that focuses on reducing costs during the manufacturingcycle47. Deciding how to allocate resources over the life cycle usually is:a. decided once at the beginning of the design phaseb. not known until the beginning of the manufacturing cyclec. part of product developmentd. an iterative process over the life of the product48. Total-life-cycle costing is the process of managing costs within:a. research, development, and engineering, manufacturing, andpost-sale service and disposalb. market research, product design, and product developmentc. planning, monitoring, and correctingd. timeliness, consistency, and flexibility49. The service cycle consists of the following stages:a. market research, product design, and product developmentb. research, development, and engineering, manufacturing, and post-sale service and disposalc. selling price, target profit, and target costd. rapid growth, transition, and maturity50. An understanding of total-life-cycle costs can lead to:a. additional costs during the manufacturing cycleb. less need for the evaluation of opportunity costsc. cost effective product designs that are easier to serviced. mutually beneficial relationships between buyers and sellers51. Emerging customer needs are assessed and ideas generated for newproducts during the __________ stage of research, development, and engineering.a. market researchb. product designc. product developmentd. service52. Total-life-cycle costing is particularly important when:a. the development period for research, development, andengineering is short and inexpensiveb. there are significant nonproduction costsc. most costs are locked in during productiond. a low percentage of costs are incurred before any revenues arereceived53. The best chance of incorporating engineering flexibility is during the:a. research, development, and engineering cycleb. manufacturing cyclec. post-sale service and disposal cycled. operating cycle54. One goal of __________ is to design costs out of products in theresearch, development, and engineering stage.a. cost-plus pricingb. target costingc. Kaizen costingd. traditional costing55. __________ starts with estimated product costs and next determinesthe estimated selling price.a. Standard costingb. Target costingc. Kaizen costingd. Traditional costing56. __________ starts with estimated product costs and next adds theexpected profit margin.a. Cost-plus pricingb. Target costingc. Kaizen costingd. Standard costing57. All of the following are true regarding target costing EXCEPT that:a. improvements are implemented in small, incremental amountsb. customer input is collected continually throughout the targetcosting processc. input is requested from suppliers and distributorsd. a key goal is to minimize costs over the product’s useful life58. All of the following are associated with target costing EXCEPT:a. value engineeringb. target reduction ratesc. supply-chain managementd. cross-functional teams59. Concerns about target costing include all EXCEPT that:a. attention may be diverted away from other company goalsb. excessive pressure is put on suppliersc. development time may decreased. burnout of design engineers occurs60. Target costing differs from traditional costing in all of the followingways EXCEPT:a. target costing collects market research continually throughout thetarget costing process rather than as a single eventb. target costing uses the total-life-cycle concept to minimizeownership costsc. traditional costing spends less time on product specification anddesignd. traditional costing uses cross-functional teams to guide theprocess61. Target costing is:a. used for short-term pricing decisionsb. one form of cost-plus pricingc. where the selling price estimate is based on the customers’perceived value of the productd. where the relevant costs are all variable costs62. Relevant costs for target pricing include:a. variable manufacturing costsb. variable manufacturing and variable nonmanufacturing costsc. all fixed costsd. all future costs, both variable and fixed63. Place the following steps for the implementation of target costing inorder:A = Derive a target costB = Develop a target selling priceC = Perform value engineeringD = Determine target profit margina. B D A Cb. B A D Cc. A D B Cd. A B C D64. Value engineering may result in all of the following EXCEPT:a. improved product designb. changes in materials specificationsc. increases in the quantity of nonvalue-added cost driversd. the evaluation of all business functions within the value chain65. To design costs out of products is a goal of:a. cost-plus pricingb. target costingc. kaizen costingd. peak-load costing66. The product strategy in which companies first determine the price atwhich they can sell a new product and then design a productthat can be produced at a low enough cost to provide adequate operating income is referred to as:a. cost-plus pricingb. target costingc. kaizen costingd. full costingTHROUGH 70.After conducting a market research study, Schultz Manufacturing decided to produce a new interior door to complement its exterior door line. It is estimated that the new interior door can be sold at a target price of $60. The annual target sales volume for interior doors is 20,000. Schultz has a 20% expected return on sales target.67. What are target sales revenues?a. $960,000b. $2,000,000c. $1,200,000d. None of the above is correct.68. What is the target profit margin?a. $240,000b. $300,000c. $192,000d. $180,00069. What is the target cost?a. $900,000b. $960,000c. $1,260,000d. $1,008,00070. What is the target cost for each interior door?a. $48b. $58c. $60d. $45THROUGH 73.Dennis’ TV currently sells small televisions for $180. It has costs of $140.A competitor is bringing a new small television to market that will sell for $150. Management believes it must lower the price to $150 to compete in the market for small televisions. Marketing believes that the new price will cause sales to increase by 10%, even with a new competitor in the ma rket. Dennis’ sales are currently 100,000 televisions per year.71. What is the change in profit margin if Marketing is correct and onlythe sales price is changed?a. $1,100,000b. $300,000c. $(1,100,000)d. $(2,900,000)72. What is the new target cost if profit margin is 25% of sales?a. $37.50b. $45.00c. $112.50d. $135.0073. What is the target cost if the company wants to maintain its sameprofit margin and Marketing is correct?a. $112.50b. $113.64c. $123.34d. $140.0074. __________ focuses on reducing costs during the manufacturingstage.a. Cost-plus pricingb. Target costingc. Kaizen costingd. Traditional costing75. All below are true regarding Kaizen costing EXCEPT that:a. cost-variance analysis compares target Kaizen costs with actualcost reduction amountsb. cost reductions apply to all variable costsc. workers are assumed to have the best knowledge to improveprocesses and reduce costsd. cost reduction targets are set and applied on an annual basis76. Concerns about Kaizen costing include:a. radical process improvementsb. excessive pressures are put on employeesc. focus is on the overall systemd. grace periods may be granted77. All of the following are associated with Kaizen costing EXCEPT:a. target reduction rateb. supply-chain managementc. cost reductions during manufacturingd. small monthly cost reductionsTHE FOLLOWING INFORMATION APPLIES TO QUESTIONS 78AND 79.Dan and Donna Enterprises are using the Kaizen approach to budgeting for 2005. The budgeted income statement for January 2005 is as follows: Sales (84,000 units) $500,000Less: Cost of goods sold 300,000Gross margin 200,000Operating expenses (includes $50,000 of fixed costs) 150,000 Operating income $ 50,000Under the Kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.78. What is budgeted cost of goods sold for March 2005?a. $294,030b. $294,000c. $300,000d. $297,00079. What is budgeted gross margin for March 2005?a. $196,020b. $198,000c. $204,020d. $205,97080. Environmental costing includes all below EXCEPT:a. target reduction ratesb. selecting suppliers with matching environmental philosophiesc. disposing of waste productsd. addressing post-sale disposal issues81. Benchmarking partners:a. have to be of equal sizeb. are most likely to be industry leadersc. have to be within the same industryd. have to trust each other。

CHAPTER 9THE BALANCED SCORECARDTRUE/FALSE1.With the emergence of the information era, companies need to create value from theirintangible assets as well as their physical and financial assets.a.Trueb.False2.The primary purpose of the Balanced Scorecard is to obtain increased operating profits forthe current year.a.Trueb.False3.To achieve success, it is important to set nonfinancial objectives as well as financialobjectives.a.Trueb.False4.Different value propositions lead to different Balanced Scorecards.a.Trueb.False5. A properly constructed Balanced Scorecard tells the story of a business unit’s strategy.a.Trueb.False6.Strategy is about selecting the set of activities in which the organization will excel to createa sustainable difference in the marketplace.a.Trueb.False7.The vision and mission statement set the general direction for the organization.a.Trueb.False8.To create the Balanced Scorecard, first measures are identified and then translated intoobjectives.a.Trueb.False9.One valuable measure for the customer perspective of the Balanced Scorecard is marketshare.a.Trueb.False10.The learning and growth perspective of the Balanced Scorecard evaluates the profitabilityof the strategy.a.Trueb.False11.Employee satisfaction is a measure of the internal business perspective of the BalancedScorecard.a.Trueb.False12.Success in the customer perspective of the Balanced Scorecard should lead to improvementin the financial perspective.a.Trueb.False13.Key performance indicator scorecards that don’t reflect a company’s strategy can be just aseffective as the Balanced Scorecard.a.Trueb.False14.Key performance indicator cards will lead to local but not to global or strategicimprovements.a.Trueb.False15.Nonprofit and government organizations cannot use the Balanced Scorecard since financialperformance is not their primary measurement.a.Trueb.False16.Mission, rather than the financial perspective, drives the strategy of nonprofit andgovernment organizations.a.Trueb.False17.Balanced Scorecard measurements create focus for the future.a.Trueb.False18.CEOs and senior leadership can effectively implement strategy by themselves.a.Trueb.False19.Poor scorecard design, rather than a poor organizational process, is the biggest threat tosuccessful Balanced Scorecard implementation.a.Trueb.False20.If a Balanced Scorecard implementation team is really committed, they can initiallydevelop the perfect scorecard.a.Trueb.FalseMULTIPLE CHOICE21.Moving from the industrial age to the information age, companies need to:a.focus on the management of financial assets and liabilitiesb.make prudent investment in physical assetsc.create value from their intangible assets as well as their physical and financial assetsd.present an expanded section of intangible assets on their balance sheets22.Many intangible assets:a.do not appear on the balance sheet since it is difficult to place a reliable financialvalue on themb.should be evaluated with ROI and other performance measuresc.can be measured and managed with current financial control systemsd.are unimportant because they have no physical substance23.Intangible assets that are currently reported on the balance sheet include:a.loyal and profitable customer relationsb.innovative products and servicesc.employee skills and motivationd.the cost of a patent giving exclusive rights to a process24.The saying “what gets measured gets done” refers to measuring performance:a.so that appropriate disciplinary actions can be takenb.to ensure that employees perform equally in all dimensions of their jobsc.so that essential tasks get accomplishedd.to ensure that the ethical code of conduct is also being enforced25.The use of multiple-performance measures would be expected to lead to all of thefollowing EXCEPT:a.more extensive use of financial measures such as cost and profitb.employees recognizing the various dimensions of their workc.the use of new performance measures such as customer satisfaction and employeemoraled.group-level performance measures26.Balanced Scorecard objectives are in balance when:a.debits equal creditsb.financial performance measurements are less than the majority of measurementsc.the measurements are faird.the measurements reflect an improvement over the previous year27.The Balanced Scorecard is said to be “balanced” because it measures:a.short-term and long-term objectivesb.financial and nonfinancial objectivesc.internal and external objectivesd.All of the above are correct.28.__________ translate(s) an organization’s mission, vision, and strategy into acomprehensive set of performance measures that provide the framework for implementing its strategy.a.Critical success factorsb.The value propositionc.Objectivesd.The Balanced Scorecard29.Which of the following statements is NOT true of a good Balanced Scorecard?a.It tells the story of a company’s strategy by articulating a sequence of cause-and-effect relationships.b.It helps to communicate corporate strategy to all members of the organization.c.It identifies all measures, whether significant or small, that help to implementstrategy.d.It uses nonfinancial measures to serve as leading indicators of future financialperformance.30.Which of the following statements is NOT true of the Balanced Scorecard?a.Different strategies call for different scorecards.b.Successful implementation requires commitment and leadership from topmanagement.c.Only objective financial measures should be used, and subjective nonfinancialmeasures should be avoided.d.Cause-and-effect linkages may not be precise and should evolve over time.31. A strategy map provides direct cause-and-effect linkages between the:a.financial perspective and the learning and growth perspectiveb.financial perspective and the internal perspectivec.customer perspective and the internal perspectived.customer perspective and the learning and growth perspective32. A chain of cause-and-effect relationships that appropriately link the four balancedscorecard perspectives is:a. a high return on investment causes customer loyalty that results in skilled productionworkers that improve process qualityb.skilled production workers help to produce process quality that results in customerloyalty that helps to increase return on investmentc.customer loyalty results in a high return on investment that results in the ability toattract skilled production workers that improve process qualityd.improved process quality results in a high return on investment that causes customerloyalty that results in the ability to attract skilled production workers33.If a financial measure were growing revenues, then a driver from the customer perspectivewould MOST likely be:a.cross-selling other company productsb.trained employeesc.reduced cycle timesd.innovative processes34.If a customer measure were customer loyalty, then a driver from the internal perspectivewould MOST likely be:a.implementing cutting-edge technologyb.repeat salesc.high-quality production processesd.increased profits35.If an internal measure were shorter cycle times, then a driver from the learning and growthperspective would MOST likely be to:a.lower cost of acquiring materialsb.achieve just-in-time supplier capabilityc.offer a complete product lined.expand product offerings36.Which of the following statements is true?a.Vision and mission set the general direction for the organization.b.Strategy is a concise, internally-focused statement of how the organization expects tocomplete and deliver value to customers.c.Mission is a concise, externally-focused statement that expresses how theorganization wants to be perceived by the external world.d.Vision is about selecting the set of activities to create a sustainable difference in themarketplace.37.The purpose of the Balanced Scorecard is BEST described as helping an organization:a.develop customer relationsb.mobilize employee skills for continuous improvements in processing capabilities,quality, and response timesc.introduce innovative products and services desired by target customersd.translate an organization’s mission, vision, and strategy into a set of performancemeasures that help to implement the strategy38.The FIRST step to successful Balanced Scorecard implementation is clarifying:a.the organization’s mission, vision, and strategyb.who is the target customerc.the owner’s expectations about the return on investmentd.the objectives of all four balanced scorecard measurement perspectivesTHE FOLLOWING INFORMATION APPLIES TO QUESTIONS 39 AND 40.Stewart Corporation plans to grow by offering a sound system, the SS3000, which is superior and unique from the competition. Stewart believes that putting additional resources into R&D and staying ahead of the competition with technological innovations is critical to implementing its strategy.39.Stewart’s value proposition is:a.product innovation and leadershipb.best total costplete customer solutionsd.employees recognizing customer needs40.To further company strategy, measures on the Balanced Scorecard would MOST likelyinclude:a.shorter cycle timesb.manufacturing qualityc.yieldd.lowest cost supplierTHE FOLLOWING INFORMATION APPLIES TO QUESTIONS 41 AND 42.Riter Corporation manufactures water toys. It plans to grow by producing high-quality water toys at a low cost that are delivered in a timely manner. There are a number of other manufacturers who produce similar water toys. Riter believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy.41.Riter’s value proposition is:a.product innovation and leadershipplete customer solutionsc.employees recognizing customer needsd.best total cost42.To further company strategy, measures on the balanced scorecard would MOST likelyinclude:a.number of process improvementsb.first to marketc.longer cycle timesd.number of new products43.__________ are (is) best stated as action phrases that articulate what the organization hopesto accomplish.a.Measuresb.The value propositionc.Objectivesd.The balanced scorecard44.__________ describe(s) specifically how success in achieving objectives is determined.a.Measuresb.The value propositionc.Targetsd.The Balanced Scorecard45.__________ establish the level of performance or rate of improvement required for ameasure.a.Critical success factorsb.The value propositionc.The Balanced Scorecardd.Targets46.Identify the BEST description below of the Balanced Scorecard’s financial perspective. Toachieve our firm’s vision and strategy:a.How can we obtain greater profits for the current year?b.How should we appear to our shareholders?c.How will we obtain continuous improvements?d.How can we secure greater customer satisfaction?47.Identify the BEST description of the Balanced Scorecard’s internal perspective. To achieveour firm’s vision and strategy:a.How do we lower costs?b.How do we motivate employees?c.How can we obtain greater profits?d.What must we excel at to satisfy our customers and shareholders?48.All of the following questions relate to the Balanced Scorecard’s learning and growthperspective EXCEPT:a.How do we achieve greater employee satisfaction?b.How do we increase profits and return on capital?c.How do we provide information systems with updated technology?d.How will we sustain our ability to change and improve?49.Identify the BEST description of the Balanced Scorecard’s customer perspective. Toachieve our firm’s vision and strategy:a.How do we obtain a greater market share?b.What do our noncustomers consider to be most important?c.What new processes do our customers value?d.How do we obtain outcomes that meet or exceed customer expectations?50.The return-on-investment ratio is an example of a Balanced Scorecard measure of the:a.internal perspectiveb.customer perspectivec.learning and growth perspectived.financial perspective51.The number of complaints about a product is an example of a Balanced Scorecard measureof the:a.internal perspectiveb.customer perspectivec.learning and growth perspectived.financial perspective52.Manufacturing cycle efficiency is an example of a Balanced Scorecard measure of the:a.internal perspectiveb.customer perspectivec.learning and growth perspectived.financial perspective53.Surveys of employee satisfaction is an example of a Balanced Scorecard measure of the:a.internal perspectiveb.customer perspectivec.learning and growth perspectived.financial perspective54.Measures of the Balanced Scorecard’s customer perspective include:a.market shareb.number of on-time deliveriesc.number of process improvementsd.revenue growth55.The following statements are true regarding the financial perspective EXCEPT:a.Financial performance can be improved through two basic approaches – revenuegrowth and productivity.b.Financial objectives typically relate to profitability.c. A financial measure might be net income.d. A financial objective might be to offer low prices to satisfy and retain price-sensitivecustomers.56.The following statements are true regarding the customer perspective EXCEPT:a.Customer satisfaction leads to customer retentionb. A customer target might be to reduce cash expenses by 3%.c.Customer retention generally leads to increased customer profitabilityd.Success in the customer perspective should lead to improvement in the financialperspective.57.It is useful to think of the internal business processes perspective of the Balanced Scorecardwithin four groupings that include all of the following EXCEPT:a.operating processesb.customer satisfaction processesc.innovation processesd.regulatory and social processes58.Managers for the learning and growth perspective of the Balanced Scorecard must invest inall of the following EXCEPT:a.reducing development cycle timesb.improving the skills of their employeesc.enhancing information technology and systemsd.aligning people to the company’s objectives59.Key performance indicator cards are scorecards that are developed:a.with only a single measure for each of the Balanced Scorecard perspectivesb.without working from organizational strategyc.to be more effective than the balanced scorecardd.to define the compensation system for executives60.Key performance indicator cards:a.lead to local but not global or strategic improvementsb.include only financial measuresc.are organized into ten perspectivesd.measure only a single Balanced Scorecard perspective61.Nonprofit and government organizations:a.cannot use the Balanced Scorecard because they have no customersb.cannot use the Balanced Scorecard because they have no financial objectivec.may use the Balanced Scorecard by adding a social impact perspective to the top ofthe strategy mapd.may use the Balanced Scorecard by not linking it to mission and strategy62.Success for nonprofit and government organizations is measured primarily by:a.their financial performanceb.their effectiveness in providing benefits to constituentsc.whether they can raise moneyd.whether they can balance their budgets63.To effectively use the Balanced Scorecard, nonprofit and government organizations:a.must identify a clear strategy with outcomes and initiatives identifiedb.must identify an extended list of planned programsc.must shift thinking to what it plans to do, not what it plans to accomplishd.These organizations cannot effectively use the Balanced Scorecard.64.Nonprofit and government organizations:a.may identify the customer as the funder (taxpayer/donor) or the recipient of theservicese the Balanced Scorecard to communicate mission and strategy more clearly toemployeese the mission rather than shareholder objectives to drive strategyd.All of the above are correct.65.Measurement for the Balanced Scorecard:a.creates focus for the futuremunicates an important message to all employeesc.focuses the entire organization on strategic implementationd.All of the above are correct.66.Translating the strategy to operational terms:a.is an analytical exerciseb.results in the benefit of having the end product of the scorecardc.often results in team building and commitment to the new strategyd.All of the above are correct.67.Which of the following statements regarding aligning the organization to strategy is true?a.Measures of individual business units must add up to the corporate measure, just likeaggregating financial measures.b.Support functions and shared units are exempt from the Balanced Scorecard processsince they have no external customer.c.High-level strategic objectives on the corporate scorecard guide the development ofBalanced Scorecards for the decentralized operating units.d.All of the above are correct.68.Which of the following statements regarding strategy is correct?a.All employees are challenged to develop team or individual objectives that supportcorporate objectives.b.CEOs and senior leadership can implement strategy by themselves.c.It is safe to assume that the workforce is incapable of understanding these conceptsand ideas.d.All of the above are correct.69.To become a strategy-focused organization:a.monthly management meetings should focus on variances between performance andwhat was plannedb.the budgeting process must protect long-term initiatives from the pressures to delivershort-term performancec.scorecards and priorities should be updated annually when preparing next year’sbudgetd.All of the above are correct.70.To mobilize change, leadership should:a.actively involve the executive teamb.continually focus on the change initiativese teamwork to coordinate changesd.All of the above are correct.71.The greatest threat to successful Balanced Scorecard implementation is:a.poor scorecard designb. a poor organizational process for development and implementationc.too few scorecard measuresd.too many financial perspective measures72.Senior management, rather than middle management, must be actively involved in theBalanced Scorecard project because:a.middle management lacks understanding of the strategy for the entire organizationb.middle management lacks authorization to make decisionsc.senior management needs to build an emotional commitment to the strategyd.All of the above are correct.73.Successful implementation of the Balanced Scorecard:a.may be completed by one important member of the senior management team, such asthe chief financial officerb.involves everyone in the organization knowing and understanding the strategyc.should not begin until data are collected for all scorecard measuresd.starts with a process to acquire a new data collection systemEXERCISE/PROBLEM74.Draw a strategy map that identifies the cause-and-effect linkages of the followingobjectives:Process qualityCustomer loyaltySkilled production workersReturn on investment75.Draw a strategy map that identifies the cause-and-effect linkages of the followingobjectives:Market shareStrategic technology availabilityGrow revenuesDesign and develop new products76.Buck Corporation plans to grow by offering a computer monitor, the CM3000, which issuperior and unique from the competition. Buck believes that putting additional resources into R&D and staying ahead of the competition with technological innovations are critical to implementing its strategy.Required:a.Is Buck’s strategy one of product innovation and leadership, best total cost, orcomplete customer solutions? Briefly explain.Identify at least one key element that you would expect to see included in the BalancedScorecard:b.for the financial perspective;c.for the customer perspective;d.for the internal perspective; ande.for the learning and growth perspective.77.Maloney Corporation manufactures plastic water bottles. It plans to grow by producinghigh-quality water bottles at a low cost that are delivered in a timely manner. There are a number of other manufacturers who produce similar water bottles. Maloney believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy.Required:a.Is Maloney’s strategy one of product innovation and leadership, best total cost, orcomplete customer solutions? Briefly explain.Identify at least one key element that you would expect to see included in the Balanced Scorecard:b.for the financial perspective;c.for the customer perspective;d.for the internal perspective; ande.for the learning and growth perspective.CRITICAL THINKING/ESSAY78.Give at least two examples of knowledge-based intangible assets. Are knowledge-basedintangible assets critical for success? Explain.79.What are the four key perspectives in the Balanced Scorecard? In a strategy map, what arethe cause-and effect linkages among these four perspectives?80.What is the primary purpose of the Balanced Scorecard?81.What is a key performance indicator scorecard and how does it differ from the BalancedScorecard? Which is more effective?82.How does a Balanced Scorecard for nonprofit and government agencies differ from a for-profit scorecard?83.Describe at least two of the five principles that assist in making the transition to a strategy-focused organization.84.What is the key ingredient to successful Balanced Scorecard implementation? Explain.CHAPTER 9THE BALANCED SCORECARDTRUE/FALSE LO1 1.a LO2 2.b LO2 3.a LO2 4.a LO3 5.a LO3 6.a LO37.a LO48.b LO49.a LO410.b LO411.b LO412.a LO513.b LO514.a LO615.b LO616.a LO717.a LO718.b LO819.b LO820.b MULTIPLE CHOICELO121.cLO122.aLO123.dLO124.cLO125.aLO226.bLO227.dLO228.dLO229.cLO230.cLO231.cLO232.bLO233.aLO234.cLO235.bLO336.aLO337.dLO338.aLO339.aLO340.bLO341.dLO342.aLO443.cLO444.aLO445.dLO446.bLO447.dLO448.bLO449.dLO450.dLO451.bLO452.aLO453.cLO454.aLO455.dLO456.bLO457.bLO458.aLO559.bLO560.aLO661.cLO662.bLO663.aLO664.dLO765.dLO766.dLO767.cLO768.aLO769.bLO770.dLO871.bLO872.dLO873.bEXERCISE/PROBLEMLO274.Skilled production workers → Process quality → Customer loyalty → Return oninvestmentLO275.Strategic technology availability → Design and develop new products → Market share →Grow revenuesLO2,3,476.Solution:a.Buck’s strategy is one of product innovation and leadership because the companyplans to offer a product that is superior and unique from the competition.The company’s Balanced Scorecard should describe the product innovation and leadership strategy. Key elements should include:b.operating income growth from charging higher margins for CM3000 for the financialperspective;c.market share in the high-end monitor market, customer satisfaction, and newcustomers for the customer perspective;d.manufacturing quality, new product features added, and order delivery time for theinternal business perspective; ande.development time for new features, improvements in manufacturing technologies,employee education and skill levels, and employee satisfaction for the learning andgrowth perspective.LO2,3,477.Solution:a.Maloney’s strategy is one of best total cost because there are a number of othermanufacturers who produce similar water bottles. To succeed, Maloney will have toachieve lower costs relative to competitors through productivity and efficiencyimprovements, elimination of waste, and tight cost controls.The company’s Balanced Scorecard should describe the best total cost strategy. Keyelements should include:b.operating income growth from productivity gains and growth for the financialperspective;c.growth in market share, new customers, customer responsiveness, and customersatisfaction for the customer perspective;d.yield, time to complete customer jobs, and order delivery time for the internalbusiness perspective; ande.number of process improvements, hours of employee training, and employeesatisfaction for the learning and growth perspective.CRITICAL THINKING/ESSAYLO178.Give at least two examples of knowledge-based intangible assets. Are knowledge-basedintangible assets critical for success? Explain.Solution: Yes, business has moved from the industrial age into the information age where knowledge-based intangible assets create value and are critical for success. Examplesinclude loyal and profitable customer relations, high-quality processes, innovative products and services, employee skills and motivation, and database and information systems.LO279.What are the four key perspectives in the Balanced Scorecard? In a strategy map, what arethe cause-and effect linkages among these four perspectives?Solution: The four key perspectives in the Balanced Scorecard are:a.the financial perspective;b.the customer perspective;c.the internal perspective; andd.the learning and growth perspective.In a strategy map, the learning and growth perspective causes improvement in the internal business processes perspective, which causes improvement in the customer perspective, which helps to attain the objectives of the financial perspective.Learning and growth → Internal → Customer → Financial perspectivesLO380.What is the primary purpose of the Balanced Scorecard?Solution: The primary purpose of the Balanced Scorecard is to translate an organization’s vision, mission, and strategy into a set of performance measures that put that strategy into action with clearly-stated objectives, measures, targets, and initiatives.LO581.What is a key performance indicator scorecard and how does it differ from the BalancedScorecard? Which is more effective?Solution: The Balanced Scorecard translates an organization’s strategy into a set ofperformance measures that put that strategy into action with clearly-stated objectives,whereas the key performance indicator scorecard does not link the performance indicators to a strategy. The Balanced Scorecard is more effective because it links objectives tostrategy.LO682.How does a Balanced Scorecard for nonprofit and government agencies differ from a for-profit scorecard?Solution: The organization’s mission drives the nonprofit and government agencyBalanced Scorecard, whereas the financial perspective objectives drive the for-profitBalanced Scorecard.The for-profit must satisfy customers, while the nonprofit and government agency must satisfy funders and recipients.LO783.Describe at least two of the five principles that assist in making the transition to a strategy-focused organization.Solution: Students should list at least two of the following principles:1.translate the strategy to operational terms;2.align the organization to the strategy;3.make strategy everyone’s job;4.make strategy a continual process; and5.mobilize leadership for changeLO884.What is the key ingredient to successful Balanced Scorecard implementation? Explain.Solution: The key ingredient to successful Balanced Scorecard implementation is toactively involve senior management.Only senior management understands the strategy of the whole organization and isempowered to make the necessary decisions. Their involvement also builds emotionalcommitment that is as important as their knowledge and authority.。

CHAPTER 1MANAGEMENT ACCOUNTING: INFORMATION THAT CREATES VALUE TRUE/FALSE1. Management accounting gathers short-term, long-term, financial, and nonfinancialinformation.a. Trueb. False2. Management accounting information generally reports on the organization as a whole.a. Trueb. False3. Companies have to follow strict guidelines when designing a management accountingsystem.a. Trueb. False4. A good management accounting system is intended to meet specific decision-making needsat all levels in the organization.a. Trueb. False5. During the history of management accounting, innovations were developed to address thedecision-making needs of managers.a. Trueb. False6. A key element in any organization’s strategy is to identify i ts target customers and todeliver what those target customers want.a. Trueb. False7. The value proposition has only two elements: cost and quality.a. Trueb. False8. Quality is the degree of conformance between what the customer is promised and what thecustomer receives.a. Trueb. False9. Recently, the demand for improved management accounting and control information withinmanufacturing firms has also occurred in service organizations.a. Trueb. False10. Recently, the competitive environment for both manufacturing and service companies hasbecome far more challenging and demanding.a. Trueb. False11. Service companies are very similar to manufacturing companies in may ways, including thefact that many employees have direct contact with customers.a. Trueb. False12. Sensitivity to timeliness and quality of service is especially important to serviceorganizations.a. Trueb. False13. Government and nonprofit organizations, as well as profit-seeking enterprises, are feelingthe pressures for improved performance.a. Trueb. False14. Management accounting information allows managers to compare actual and planned costsand to identify areas and opportunities for process improvement.a. Trueb. False15. Management accounting can provide information on customer satisfaction.a. Trueb. False16. ROI (return on investment) combines two profitability measures to produce a singlemeasure of departmental or divisional performance.a. Trueb. False17. Around 1920, centralized control of decentralized operations was accomplished by havingcorporate managers receive financial reports about divisional operations and profitability.a. Trueb. False18. In the late 1990s, little interest or attention was paid to evaluating management’sappropriate governance and strategy choices.a. Trueb. False19. Financial information identifies and explains the underlying problems.a. Trueb. False20. Management accounting measures can provide advance warnings of problems.a. Trueb. False21. Customer satisfaction is an example of financial information.a. Trueb. False22. Operating profit is an example of nonfinancial information.a. Trueb. False23. Organizational leadership plays a critical role in fostering an org anization’s culture of highethical standards.a. Trueb. False24. Information is never neutral; just the act of measuring and reporting information affects theindividuals involved.a. Trueb. False25. Boundary systems are always stated in positive terms that outline maximum standards ofbehavior.a. Trueb. FalseMULTIPLE CHOICE26. Management accounting helps a company achieve:a. its strategic objectivesb. its operational objectivesc. control and also supports performance evaluationd. All of the above are correct.27. Which of the following types of information are used in management accounting?a. financial informationb. nonfinancial informationc. information focused on the long termd. All of the above are correct.28. Management accounting:a. focuses on estimating future revenues, costs, and other measures to forecast activitiesand their resultsb. provides information about the company as a wholec. reports information that has occurred in the past that is verifiable and reliabled. provides information that is generally available only on a quarterly or annual basis29. Which of the following descriptors refer to management accounting information?a. It is verifiable and reliable.b. It is driven by rules.c. It is prepared for shareholders.d. It provides reasonable and timely estimates.30. Which of the following statements refers to management accounting information?a. There are no regulations governing the reports.b. The reports are generally delayed and historical.c. The audience tends to be stockholders, creditors, and tax authorities.d. The scope tends to be highly aggregate.31. Management accounting information includes:a. tabulated results of customer satisfaction surveysb. the cost of producing a productc. the percentage of units produced that is defectived. All of the above are correct.32. Management accounting reports MOST likely include information about:a. customer complaintsb. net income for the yearc. total assetsd. All of the above are correct.33. The person MOST likely to use management accounting information is a(n):a. banker evaluating a credit applicationb. shareholder evaluating a stock investmentc. governmental taxing authorityd. assembly department supervisor34. Which of the following is NOT a function of a management accounting system?a. strategic planningb. financial reportingc. operational controld. product costing35. Financial accounting provides the PRIMARY source of information for:a. decision making in the finishing departmentb. improving customer servicec. preparing the income statement for shareholdersd. planning next year’s operating budget36. Financial accounting:a. focuses on the future and includes activities such as preparing next year's operatingbudgetb. must comply with GAAP (generally accepted accounting principles)c. reports include detailed information on the various operating segments of the businesssuch as product lines or departmentsd. is prepared for the use of department heads and other employees37. The person MOST likely to use ONLY financial accounting information is a:a. factory shift supervisorb. vice president of operationsc. current shareholderd. department manager38. The accounting process is constrained by mandated reporting requirements by all of thefollowing organizations EXCEPT the:a. Internal Revenue Service (IRS)b. Institute of Management Accountants (IMA)c. Financial Accounting Standards Board (FASB)d. Securities and Exchange Commission (SEC) for companies that are publicly traded39. Historically:a. in the beginning of the 20th century, the Guilds kept detailed records of raw materialsand labor costs as evidence of product qualityb. in medieval England, the basics of modern management accounting emerged withstandards for material use, employee productivity, and budgetsc. in the late 19th century, railroad managers implemented large and complex costingsystems to compute the cost of different types of freightd. from 1400-1600, large and integrated companies such as DuPont and General Motors,developed ways to measure return on investment40. In general, it was not until the 1970s that management accounting systems:a. were improved because of demands by the FASB and the SECb. stagnated and proved inadequatec. started to develop innovations in costing and performance-measurement systems dueto intense pressure from overseas competitorsd. started to address the decision-making needs of managers41. All successful organizations must identify and understand their:a. weaknessesb. competitionc. strategyd. definition of quality42. A key element of any organization’s strategy is identifying:a. its potential shareholdersb. its target customersc. competitor’s productsd. employee needs43. What an organization tries to deliver to customers is called its value proposition, whichincludes the elements of:a. cost and qualityb. cost, quality, and functionality and featuresc. cost, quality, functionality and features, and serviced. cost, quality, functionality and features, service, and industry standards44. The price paid by the customer, given the product features and competitor’s prices, isreferred to as the __________ element of the value proposition.a. costb. industry standardsc. qualityd. service45. The degree of conformance between what the customer is promised and what the customerreceives is referred to as the __________ element of the value proposition.a. costb. industry standardsc. qualityd. service46. The performance of the product, for example, a meal in a restaurant provides the diner withthe level of satisfaction expected for the price paid, is referred to as the __________element of the value proposition.a. functionality and featuresb. industry standardsc. qualityd. service47. How the customer is treated at the time of the purchase is an example of the __________element of the value proposition.a. functionality and featuresb. industry standardsc. qualityd. service48. Management accounting provides:a. information on the efficiency of factory laborb. information on the cost of servicing commercial customersc. information on the performance of an operating divisiond. All of the above are correct.49. Which of the following groups would be LEAST likely to receive detailed managementaccounting reports?a. stockholdersb. customer service representativesc. production supervisord. vice president of operations50. Top executives of a multi-plant firm are LEAST likely to use management accountinginformation:a. to support decisions that result in long-term consequencesb. to evaluate the performance of individual plantsc. for strategic planningd. for operational control51. Managers of service departments need all of the following information EXCEPT:a. efficiency data on work performanceb. quality data on work performancec. profitability data of the whole companyd. profitability data of the service department52. A national company manufactures a line of modern furniture. Information MOST useful tothe employee who assembles the furniture includes:a. a daily report comparing the actual time it took to assemble a piece of furniture to thestandard time allowedb. a monthly report on the portion of furniture pieces assembled with defectsc. the number of furniture pieces sold this monthd. revenue per employee53. A national company manufactures a line of modern furniture. Information MOST usefulto the top executive includes:a. individual job summaries of materials usedb. monthly financial reports on the company’s profitability by product linec. time reports submitted by each employeed. scheduled downtime for routine maintenance on machines54. A quarterly report disclosing declining market share information is MOST useful to:a. a front-line employeeb. the manager of operationsc. the chief executive officerd. the accounting department55. A weekly report comparing machine time used to available machine time is informationMOST useful to:a. a front-line employeeb. the manager of operationsc. the chief executive officerd. the accounting department56. A daily report on the number of quality units assembled by each employee is informationMOST useful to:a. a front-line assembly workerb. the accounting departmentc. the chief executive officerd. the personnel department57. Which of the following would be LEAST helpful for a top manager of a company?a. profitability report of the companyb. information to monitor hourly and daily operationsc. number of customer complaintsd. operating expense summary reported by department58. Recently, increased demand for management accounting information has been:a. primarily from manufacturing firmsb. primarily from service organizationsc. from both the manufacturing and the service industriesd. an illusion; in fact, the demand for management accounting has changed very little59. Management accounting can play a critical role in the service industry because of all thefollowing reasons EXCEPT:a. firms must be especially sensitive to the timeliness and quality of customer serviceb. many employees have very little contact with customersc. customers immediately notice defects and a delay in serviced. dissatisfied customers may never return60. Historically, the NEGLECT of management accounting in the service industry was a resultof:a. noncompetitive environmentsb. global customer demandsc. the switch to free market economiesd. an influx of higher-quality and lower-priced products from overseas61. Currently, management accounting information within government and nonprofitorganizations is in greater demand because:a. public and private donors are demanding accountabilityb. citizens are requesting responsive and efficient performance from their governingunitsc. more nonprofit organizations are competing for limited fundsd. All of the above are correct.62. Currently, pressures for improved cost and performance measurements are being felt by:a. nonprofit organizationsb. governmental agenciesc. profit-seeking enterprisesd. All of the above are correct.63. Financial accounting information:a. provides a signal that something is wrongb. identifies what is wrongc. explains what is wrongd. simply summarizes information but gives no indication that anything is wrong64. Decentralized responsibility refers to allowing lower-level managers to do all of thefollowing EXCEPT:a. make decisions without seeking higher approvalb. take advantage of local opportunitiesc. make periodic financial reports to upper-managementd. pursue individual objectives even though they may not contribute to the entirecompany65. The return on investment (ROI) performance measure uses __________ to evaluate theperformance of operating divisions.a. a single numberb. four numbersc. five numbersd. ten numbers66. The return on investment (ROI) performance measure combines __________ to produce ameasure of departmental performance.a. two profitability measuresb. two capital utilization measuresc. one profitability measure and one capital intensity measured. two profitability measures and two capital intensity measures67. All of the following are true regarding the return on investment (ROI) formula developed atDupont EXCEPT that:a. it is the sole measure top-management utilizes to evaluate which division shouldreceive additional capitalb. it allows companies to have centralized control with decentralized responsibilityc. it produces a measure of divisional performanced. it equals (Operating income/Sales) x (Sales/Investment)THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 68 AND 69.The following information pertains to three divisions:Flowers Shrubs TreesSales $15,000 $28,000 $120,000Operating income $2,000 $2,000 $6,000Investment $22,000 $40,000 $100,00068. What is the return on investment for the Shrub Division?a. 2.00%b. 5.00%c. 7.14%d. 70.00%69. Which division is more profitable based on ROI?a. Flowersb. Shrubsc. Treesd. Both Flowers and Shrubs are equally more profitable than Trees.70. To help evaluate management’s appropriate governance and strategic choices,organizations have called on management accountants to develop:a. internal control systems to protect assets from theftb. measures to monitor compliance with behavior that is consistent with theorganization’s best interestsc. systems to evaluate profitabilityd. reports to highlight variances from amounts planned71. Management accounting information is BEST described as:a. providing a signal that something is wrongb. identifying and helping to explain what is wrongc. simply summarizing information, but giving no indication that anything is wrongd. measuring overall organizational performance72. For improving operational efficiencies and customer satisfaction, nonfinancial informationis:a. criticalb. helpfulc. infrequently usedd. unnecessary73. Nonfinancial information might be used to:a. improve qualityb. reduce cycle timesc. satisfy customer needsd. All of the above are correct.74. The act of simply measuring and reporting information:a. focuses the attention of employees on those processesb. diverts the emplo yee’s attention to other activitiesc. disproves the saying “What gets measured gets managed.”d. has no effect on employee behavior75. Which statement below is FALSE?a. “What gets measured gets managed.”b. People react to measurements.c. Employees spend more attention on those variables that are not getting measured.d. “If I can’t measure it, I can’t manage it.”76. When a change is introduced, employees tend to:a. embrace the changeb. be indifferent to the changec. exhibit no change in behaviord. resist the change77. The introduction of a new management system is MOST likely to motivate UNWANTEDemployee behavior when it is used for:a. evaluationb. planningc. decision makingd. coordinating individual efforts78. Management accountants are MOST likely to feel outside pressure to favorably influencethe numbers favorably when the information is used for:a. budgetingb. compensation and promotionsc. continuous improvementd. product costing79. Fostering a culture of high ethical standards includes all of the following EXCEPT:a. following the good example set by senior managementb. communicating to employees a belief system that inspires and promotes commitmentto the organization’s core valuesc. following the general examples set by front-line employeesd. communicating to all employees a boundary system that states what actions will notbe tolerated80. The Institute of Management Accountants (IMA):a. is a professional organization of management accountantsb. is a professional organization of financial accountantsc. issues standards for management accountingd. issues standards for financial accountingCRITICAL THINKING/ESSAY81. Describe management accounting and financial accounting.82. What is the purpose of management accounting?83. Briefly describe how managers make use of management accounting information.84. Describe the value proposition and the elements that comprise it.85. Is financial accounting or management accounting more useful to an operations manager?Why?86. What role has the increasingly competitive business environment played in thedevelopment of management accounting?87. Describe return on investment (ROI). Why was it developed? When was it developed?88. Give two examples of financial information and nonfinancial information.89. Discuss the potential behavior implications of performance evaluation.CHAPTER 1 SOLUTIONSMANAGEMENT ACCOUNTING: INFORMATION THAT CREATES VALUETRUE/FALSELO1 1. a LO1 2. b LO1 3. b LO1 4. a LO1 5. aLO2 6. a LO2 7. b LO2 8. a LO3 9. a LO3 10. a LO3 11. b LO3 12. a LO3 13. a LO3 14. a LO3 15. a LO4 16. b LO4 17. a LO5 18. a LO5 19. b LO5 20. aLO5 21. b LO5 22. b LO6 23. a LO6 24. a LO6 25. b MULTIPLE CHOICELO1 26. dLO1 27. dLO1 28. aLO1 29. dLO1 30. aLO1 31. dLO1 32. aLO1 33. dLO1 34. bLO1 35. cLO1 36. bLO1 37. cLO1 38. bLO1 39. cLO1 40. cLO2 41. cLO2 42. bLO2 43. cLO2 44. aLO2 45. cLO2 46. aLO2 47. dLO3 48. dLO3 49. aLO3 50. dLO3 51. cLO3 52. aLO3 53. bLO3 54. cLO3 55. bLO3 56. aLO3 57. bLO3 58. cLO3 59. bLO3 60. aLO3 61. dLO3 62. dLO4 63. aLO4 64. dLO4 65. aLO4 66. cLO4 67. aLO4 68. bLO4 69. aLO5 70. bLO5 71. bLO5 72. aLO5 73. dLO6 74. aLO6 75. cLO6 76. dLO6 77. aLO6 78. bLO6 79. cLO6 80. aMULTIPLE CHOICE68. $2,000 / $40,000 = 5.00%69. $2,000 / $22,000 = 9.09%; $2,000 / $40,000 = 5.00%; $6,000 / $100,000 = 6.00%CRITICAL THINKING/ESSAYLO181. Describe management accounting and financial accounting.Solution: Management accounting provides information to internal decision makers of the business such as top executives. Its purpose is to help managers predict and evaluate future results. Reports are generated often and are usually broken down into smaller reportingdivisions such as department or product line. There are no rules to be complied with since these reports are for internal use only.Financial accounting provides information to external decision makers such as investors and creditors. Its purpose is to present a fair picture of the financial condition of thecompany. Reports are generated quarterly or annually and report on the company as awhole. The financial statements must comply with GAAP (generally accepted accounting principles). A CPA audits, or verifies, that the GAAP are being followed.LO182. What is the purpose of management accounting?Solution: Management accounting gathers short-term and long-term financial andnonfinancial information to plan, coordinate, motivate, improve, control, and evaluatesuccess factors of an organization. Management accounting converts data into usableinformation that supports strategic, operational, and control decision making.LO183. Briefly describe how managers make use of management accounting information.Solution: Managers use accounting information for three broad purposes.ONE: To plan business operations that includes preparing strategies and budgets anddetermining the prices and costs of products and services. A company must know the cost of each product and service to decide which products to offer and whether to expand ordiscontinue product lines.TWO: To control business operations that includes comparing actual results to thebudgeted results and taking corrective action when needed.THREE: To evaluate performance.84. Describe the value proposition and the elements that comprise it.Solution: The value proposition is what an organization tries to deliver to its targetcustomers – it defines the organizational strategy.The four elements are cost, quality, functionality and features, and service.∙Cost is the price paid by the customer, given the product features and competitor’s prices.∙Quality is the degree of conformance between what the customer is promised and what the customer receives.∙Functionality and features refers to the performance of the product. For example: A meal in a restaurant provides the diner with the level of satisfaction expected for the price paid.∙Service is all of the other elements of the product. For example: How the customer is treated at the time of the purchase.LO385. Is financial accounting or management accounting more useful to an operations manager?Why?Solution: Management accounting is more useful to an operations manager becausemanagement accounting reports operating results by department or unit rather than for the company as a whole, it includes financial as well as nonfinancial data such as on-timedeliveries and cycle times, and it includes quantitative as well as qualitative data such as the type of rework that was needed on defective units.LO386. What role has the increasingly competitive business environment played in thedevelopment of management accounting?Solution: The competitive environment has changed dramatically. There has been aderegulation movement in North America and Europe during the 1970s and 1980s thatchanged the ground rules under which service companies operated. In addition,organizations encountered severe competition from overseas companies that offered high-quality products at low prices. There has been an improvement of operational controlsystems such that information is more current and provided more frequently. The nature of work has changed from controlling to informing. Firms are concerned aboutcontinuous improvement, employee empowerment, and total quality. Nonfinancialinformation has become a critical feedback measure. Finally, the focus of many firms is now on measuring and managing activities.87. Describe return on investment (ROI). Why was it developed? When was it developed?Solution: ROI = (operating income / sales) x (sales / investment)The ROI measure combines a profitability measure (operating income / sales) with a capital intensity measure (sales / investment) to provide a single measure of departmental anddivisional performance.ROI was developed in the early decades of the 1900s so that senior managers at multi-divisional diversified corporations, such as DuPont and General Motors, could evaluate the operating performance of their decentralized divisions.LO588. Give two examples of financial information and nonfinancial information.Solution: Financial information includes amounts that can be expressed in dollar amounts such as sales, net income, and total assets. It also includes ratios prepared using financial information such as increase in sales, return-on-sales, and return-on-investment.Nonfinancial information includes measures that are not expressed in dollar amounts. For example, nonfinancial measures of customer satisfaction include the number of repeatcustomers or ranked estimates of satisfaction levels. Nonfinancial measures of production quality include percent of on-time deliveries, the number of defects, production yield, and cycle times.LO689. Discuss the potential behavior implications of performance evaluation.Solution: As measurements are made on operations and, especially, on individuals and groups, the behavior of the individuals and groups are affected. People react to themeasurements being made. They will focus on those variables or the behavior beingmeasured and spend less attention on variables and behavior that are not measured. In addition, if managers attempt to introduce or redesign cost and performance measurement systems, people familiar with the previous system will resist. Management accountants must understand and anticipate the reactions of individuals to information andmeasurements. The design and introduction of new measurements and systems must be accompanied with an analysis of the likely reactions to the innovations.。

第九章全面预算一、关键概念1.投资敏感性分析2。

全面预算3。

经营预算4。

专门决策预算5。

财务预算1.生产预算2。

固定预算与弹性预算3。

增量预算与零基预算4。

定期预算与滚动预算二、分析思考1.为什么进行投资敏感性分析，投资敏感性分析的具体假定有哪些？2。

全面预算的具体涵义3.全面预算体系由哪些内容构成？各部分具体的内容是什么?1.弹性预算为什么会克服固定预算的编制缺陷？2。

与增量预算相比较,零基预算优于增量预算？为什么？3。

定期预算的缺陷是什么？与其相对应的是什么预算?三、单项选择题1.投资敏感性分析的结论表明,下列各项中其变动只能影响净现值而不会影响内部收益率指标的因素是（）。

A。

售价B。

销售量C.经营成本D.基准折现率2.在管理会计中，用于概括与企业日常业务直接相关、具有实质性的基本活动的一系列预算的概念是( ）。

A.专门决策预算B.业务预算C。

财务预算D。

销售预算3.现金预算属于下列项目中的（）。

A。

业务预算B。

生产预算C.专门决策预算D。

财务预算4。

在编制制造费用预算时，计算现金支出应予剔除的项目是( ）。

Ａ.间接材料Ｂ.间接人工Ｃ.管理人员工资Ｄ.折旧费5。

在下列预算中，其编制程序与存货的计价方法密切相关的是（)。

A。

产品成本预算B。

制造费用预算 C.销售预算D。

生产预算6.下列项目中,可以总括反映企业在预算期间盈利能力的预算是（）。

Ａ。

专门决策预算Ｂ。

现金预算Ｃ.预计利润表Ｄ。

预计资产负债表7.下列项目中，能够克服固定预算方法缺点的是（）。

Ａ。

固定预算Ｂ.弹性预算Ｃ.滚动预算Ｄ.零基预算8.下列各项中，属于零基预算编制程序第一步的是( ）。

Ａ。

提出预算期内各种活动内容及费用开支方案Ｂ。

对方案进行成本─效益分析Ｃ。

择优安排项目，分配预算资金Ｄ。

搜集历史资料9。

下列各项中，能够揭示滚动预算基本特点的表述是（）。

Ａ.预算期相对固定的Ｂ。

预算期是连续不断的Ｃ.预算期与会计年度一致Ｄ.预算期不可随意变动1。

管理会计习题第一章总论1．芙蓉公司有一个刚从财务会计工作转入管理会计工作的会计人员张某，对于管理会计知识不甚了解。

以下是他对管理会计提出的个人观点：（l）管理会计与财务会计的职能一样，主要是核算和监督，对相关人的利益进行协调。

（2）管理会计和财务会计是截然分开的，无任何联系。

（3）管理会计报告要在会计期末以报表的形式上报。

（4）管理会计的信息质量特征与财务会计的信息质量特征完全不同。

（5）在提供管理会计信息时可以完全不用考虑成本效益原则。

（6）与财务会计一样，管理会计同样提供货币性信息。

（7）一个管理会计师可以将手中掌握的信息资料随意提供给他人。

要求：对上述的观点指出正确与否，并进行分析。

第二章变动成本法1、某公司只生产经营一种产品，有关资料如下：生产量：5000件销售量：4000件直接材料：20000元直接人工：15000元变动制造费用：20000元固定制造费用：20000元销售及管理费用（全部固定）：10000元产品变动成本率（变动成本率=单位变动成本/销售单价×100%）：55%假定该公司期初无存货。

要求：（1）按完全成本法计算产品单位成本。

（2）按变动成本法计算产品单位成本。

（3）计算分析完全成本法下和变动成本法下企业本期的损益有何差异，造成这种差异的原因是什么？2、某冰箱厂连续两年亏损，厂长召集有关部门的负责人开会研究扭亏为盈的办法。

会议有关纪要如下：厂长：我厂去年亏损500万元，比前年还遭。

银行对于年续三年亏损的企业将停止贷款，如果今年不扭亏为盈，企业将被迫停产。

销售处长：问题的关键是我们每台冰箱以1600元价格出售，而每台冰箱的成本是1700元。

如果提高售价，面临竞争，冰箱就卖不出去，其出路就是想办法降低成本，否则销售越多，亏损越大。

生产厂长：我不同意。

每台冰箱的制造成本只有1450元，我厂的设备和产品工艺是国内最先进的，技术力量强，熟练工人多，控制物耗成本的经验得到行业学会的认可。

CHAPTER 1MANAGEMENT ACCOUNTING: INFORMATION THAT CREATES VALUE TRUE/FALSE1. Management accounting gathers short-term, long-term, financial, and nonfinancialinformation.a. Trueb. False2. Management accounting information generally reports on the organization as a whole.a. Trueb. False3. Companies have to follow strict guidelines when designing a management accountingsystem.a. Trueb. False4. A good management accounting system is intended to meet specific decision-making needsat all levels in the organization.a. Trueb. False5. During the history of management accounting, innovations were developed to address thedecision-making needs of managers.a. Trueb. False6. A key element in any organization’s strategy is to identify i ts target customers and todeliver what those target customers want.a. Trueb. False7. The value proposition has only two elements: cost and quality.a. Trueb. False8. Quality is the degree of conformance between what the customer is promised and what thecustomer receives.a. Trueb. False9. Recently, the demand for improved management accounting and control information withinmanufacturing firms has also occurred in service organizations.a. Trueb. False10. Recently, the competitive environment for both manufacturing and service companies hasbecome far more challenging and demanding.a. Trueb. False11. Service companies are very similar to manufacturing companies in may ways, including thefact that many employees have direct contact with customers.a. Trueb. False12. Sensitivity to timeliness and quality of service is especially important to serviceorganizations.a. Trueb. False13. Government and nonprofit organizations, as well as profit-seeking enterprises, are feelingthe pressures for improved performance.a. Trueb. False14. Management accounting information allows managers to compare actual and planned costsand to identify areas and opportunities for process improvement.a. Trueb. False15. Management accounting can provide information on customer satisfaction.a. Trueb. False16. ROI (return on investment) combines two profitability measures to produce a singlemeasure of departmental or divisional performance.a. Trueb. False17. Around 1920, centralized control of decentralized operations was accomplished by havingcorporate managers receive financial reports about divisional operations and profitability.a. Trueb. False18. In the late 1990s, little interest or attention was paid to evaluating management’sappropriate governance and strategy choices.a. Trueb. False19. Financial information identifies and explains the underlying problems.a. Trueb. False20. Management accounting measures can provide advance warnings of problems.a. Trueb. False21. Customer satisfaction is an example of financial information.a. Trueb. False22. Operating profit is an example of nonfinancial information.a. Trueb. False23. Organizational leadership plays a critical role in fostering an org anization’s culture of highethical standards.a. Trueb. False24. Information is never neutral; just the act of measuring and reporting information affects theindividuals involved.a. Trueb. False25. Boundary systems are always stated in positive terms that outline maximum standards ofbehavior.a. Trueb. FalseMULTIPLE CHOICE26. Management accounting helps a company achieve:a. its strategic objectivesb. its operational objectivesc. control and also supports performance evaluationd. All of the above are correct.27. Which of the following types of information are used in management accounting?a. financial informationb. nonfinancial informationc. information focused on the long termd. All of the above are correct.28. Management accounting:a. focuses on estimating future revenues, costs, and other measures to forecast activitiesand their resultsb. provides information about the company as a wholec. reports information that has occurred in the past that is verifiable and reliabled. provides information that is generally available only on a quarterly or annual basis29. Which of the following descriptors refer to management accounting information?a. It is verifiable and reliable.b. It is driven by rules.c. It is prepared for shareholders.d. It provides reasonable and timely estimates.30. Which of the following statements refers to management accounting information?a. There are no regulations governing the reports.b. The reports are generally delayed and historical.c. The audience tends to be stockholders, creditors, and tax authorities.d. The scope tends to be highly aggregate.31. Management accounting information includes:a. tabulated results of customer satisfaction surveysb. the cost of producing a productc. the percentage of units produced that is defectived. All of the above are correct.32. Management accounting reports MOST likely include information about:a. customer complaintsb. net income for the yearc. total assetsd. All of the above are correct.33. The person MOST likely to use management accounting information is a(n):a. banker evaluating a credit applicationb. shareholder evaluating a stock investmentc. governmental taxing authorityd. assembly department supervisor34. Which of the following is NOT a function of a management accounting system?a. strategic planningb. financial reportingc. operational controld. product costing35. Financial accounting provides the PRIMARY source of information for:a. decision making in the finishing departmentb. improving customer servicec. preparing the income statement for shareholdersd. planning next year’s operating budget36. Financial accounting:a. focuses on the future and includes activities such as preparing next year's operatingbudgetb. must comply with GAAP (generally accepted accounting principles)c. reports include detailed information on the various operating segments of the businesssuch as product lines or departmentsd. is prepared for the use of department heads and other employees37. The person MOST likely to use ONLY financial accounting information is a:a. factory shift supervisorb. vice president of operationsc. current shareholderd. department manager38. The accounting process is constrained by mandated reporting requirements by all of thefollowing organizations EXCEPT the:a. Internal Revenue Service (IRS)b. Institute of Management Accountants (IMA)c. Financial Accounting Standards Board (FASB)d. Securities and Exchange Commission (SEC) for companies that are publicly traded39. Historically:a. in the beginning of the 20th century, the Guilds kept detailed records of raw materialsand labor costs as evidence of product qualityb. in medieval England, the basics of modern management accounting emerged withstandards for material use, employee productivity, and budgetsc. in the late 19th century, railroad managers implemented large and complex costingsystems to compute the cost of different types of freightd. from 1400-1600, large and integrated companies such as DuPont and General Motors,developed ways to measure return on investment40. In general, it was not until the 1970s that management accounting systems:a. were improved because of demands by the FASB and the SECb. stagnated and proved inadequatec. started to develop innovations in costing and performance-measurement systems dueto intense pressure from overseas competitorsd. started to address the decision-making needs of managers41. All successful organizations must identify and understand their:a. weaknessesb. competitionc. strategyd. definition of quality42. A key element of any organization’s strategy is identifying:a. its potential shareholdersb. its target customersc. competitor’s productsd. employee needs43. What an organization tries to deliver to customers is called its value proposition, whichincludes the elements of:a. cost and qualityb. cost, quality, and functionality and featuresc. cost, quality, functionality and features, and serviced. cost, quality, functionality and features, service, and industry standards44. The price paid by the customer, given the product features and competitor’s prices, isreferred to as the __________ element of the value proposition.a. costb. industry standardsc. qualityd. service45. The degree of conformance between what the customer is promised and what the customerreceives is referred to as the __________ element of the value proposition.a. costb. industry standardsc. qualityd. service46. The performance of the product, for example, a meal in a restaurant provides the diner withthe level of satisfaction expected for the price paid, is referred to as the __________element of the value proposition.a. functionality and featuresb. industry standardsc. qualityd. service47. How the customer is treated at the time of the purchase is an example of the __________element of the value proposition.a. functionality and featuresb. industry standardsc. qualityd. service48. Management accounting provides:a. information on the efficiency of factory laborb. information on the cost of servicing commercial customersc. information on the performance of an operating divisiond. All of the above are correct.49. Which of the following groups would be LEAST likely to receive detailed managementaccounting reports?a. stockholdersb. customer service representativesc. production supervisord. vice president of operations50. Top executives of a multi-plant firm are LEAST likely to use management accountinginformation:a. to support decisions that result in long-term consequencesb. to evaluate the performance of individual plantsc. for strategic planningd. for operational control51. Managers of service departments need all of the following information EXCEPT:a. efficiency data on work performanceb. quality data on work performancec. profitability data of the whole companyd. profitability data of the service department52. A national company manufactures a line of modern furniture. Information MOST useful tothe employee who assembles the furniture includes:a. a daily report comparing the actual time it took to assemble a piece of furniture to thestandard time allowedb. a monthly report on the portion of furniture pieces assembled with defectsc. the number of furniture pieces sold this monthd. revenue per employee53. A national company manufactures a line of modern furniture. Information MOST usefulto the top executive includes:a. individual job summaries of materials usedb. monthly financial reports on the company’s profitability by product linec. time reports submitted by each employeed. scheduled downtime for routine maintenance on machines54. A quarterly report disclosing declining market share information is MOST useful to:a. a front-line employeeb. the manager of operationsc. the chief executive officerd. the accounting department55. A weekly report comparing machine time used to available machine time is informationMOST useful to:a. a front-line employeeb. the manager of operationsc. the chief executive officerd. the accounting department56. A daily report on the number of quality units assembled by each employee is informationMOST useful to:a. a front-line assembly workerb. the accounting departmentc. the chief executive officerd. the personnel department57. Which of the following would be LEAST helpful for a top manager of a company?a. profitability report of the companyb. information to monitor hourly and daily operationsc. number of customer complaintsd. operating expense summary reported by department58. Recently, increased demand for management accounting information has been:a. primarily from manufacturing firmsb. primarily from service organizationsc. from both the manufacturing and the service industriesd. an illusion; in fact, the demand for management accounting has changed very little59. Management accounting can play a critical role in the service industry because of all thefollowing reasons EXCEPT:a. firms must be especially sensitive to the timeliness and quality of customer serviceb. many employees have very little contact with customersc. customers immediately notice defects and a delay in serviced. dissatisfied customers may never return60. Historically, the NEGLECT of management accounting in the service industry was a resultof:a. noncompetitive environmentsb. global customer demandsc. the switch to free market economiesd. an influx of higher-quality and lower-priced products from overseas61. Currently, management accounting information within government and nonprofitorganizations is in greater demand because:a. public and private donors are demanding accountabilityb. citizens are requesting responsive and efficient performance from their governingunitsc. more nonprofit organizations are competing for limited fundsd. All of the above are correct.62. Currently, pressures for improved cost and performance measurements are being felt by:a. nonprofit organizationsb. governmental agenciesc. profit-seeking enterprisesd. All of the above are correct.63. Financial accounting information:a. provides a signal that something is wrongb. identifies what is wrongc. explains what is wrongd. simply summarizes information but gives no indication that anything is wrong64. Decentralized responsibility refers to allowing lower-level managers to do all of thefollowing EXCEPT:a. make decisions without seeking higher approvalb. take advantage of local opportunitiesc. make periodic financial reports to upper-managementd. pursue individual objectives even though they may not contribute to the entirecompany65. The return on investment (ROI) performance measure uses __________ to evaluate theperformance of operating divisions.a. a single numberb. four numbersc. five numbersd. ten numbers66. The return on investment (ROI) performance measure combines __________ to produce ameasure of departmental performance.a. two profitability measuresb. two capital utilization measuresc. one profitability measure and one capital intensity measured. two profitability measures and two capital intensity measures67. All of the following are true regarding the return on investment (ROI) formula developed atDupont EXCEPT that:a. it is the sole measure top-management utilizes to evaluate which division shouldreceive additional capitalb. it allows companies to have centralized control with decentralized responsibilityc. it produces a measure of divisional performanced. it equals (Operating income/Sales) x (Sales/Investment)THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 68 AND 69.The following information pertains to three divisions:Flowers Shrubs TreesSales $15,000 $28,000 $120,000Operating income $2,000 $2,000 $6,000Investment $22,000 $40,000 $100,00068. What is the return on investment for the Shrub Division?a. 2.00%b. 5.00%c. 7.14%d. 70.00%69. Which division is more profitable based on ROI?a. Flowersb. Shrubsc. Treesd. Both Flowers and Shrubs are equally more profitable than Trees.70. To help evaluate management’s appropriate governance and strategic choices,organizations have called on management accountants to develop:a. internal control systems to protect assets from theftb. measures to monitor compliance with behavior that is consistent with theorganization’s best interestsc. systems to evaluate profitabilityd. reports to highlight variances from amounts planned71. Management accounting information is BEST described as:a. providing a signal that something is wrongb. identifying and helping to explain what is wrongc. simply summarizing information, but giving no indication that anything is wrongd. measuring overall organizational performance72. For improving operational efficiencies and customer satisfaction, nonfinancial informationis:a. criticalb. helpfulc. infrequently usedd. unnecessary73. Nonfinancial information might be used to:a. improve qualityb. reduce cycle timesc. satisfy customer needsd. All of the above are correct.74. The act of simply measuring and reporting information:a. focuses the attention of employees on those processesb. diverts the emplo yee’s attention to other activitiesc. disproves the saying “What gets measured gets managed.”d. has no effect on employee behavior75. Which statement below is FALSE?a. “What gets measured gets managed.”b. People react to measurements.c. Employees spend more attention on those variables that are not getting measured.d. “If I can’t measure it, I can’t manage it.”76. When a change is introduced, employees tend to:a. embrace the changeb. be indifferent to the changec. exhibit no change in behaviord. resist the change77. The introduction of a new management system is MOST likely to motivate UNWANTEDemployee behavior when it is used for:a. evaluationb. planningc. decision makingd. coordinating individual efforts78. Management accountants are MOST likely to feel outside pressure to favorably influencethe numbers favorably when the information is used for:a. budgetingb. compensation and promotionsc. continuous improvementd. product costing79. Fostering a culture of high ethical standards includes all of the following EXCEPT:a. following the good example set by senior managementb. communicating to employees a belief system that inspires and promotes commitmentto the organization’s core valuesc. following the general examples set by front-line employeesd. communicating to all employees a boundary system that states what actions will notbe tolerated80. The Institute of Management Accountants (IMA):a. is a professional organization of management accountantsb. is a professional organization of financial accountantsc. issues standards for management accountingd. issues standards for financial accountingCRITICAL THINKING/ESSAY81. Describe management accounting and financial accounting.82. What is the purpose of management accounting?83. Briefly describe how managers make use of management accounting information.84. Describe the value proposition and the elements that comprise it.85. Is financial accounting or management accounting more useful to an operations manager?Why?86. What role has the increasingly competitive business environment played in thedevelopment of management accounting?87. Describe return on investment (ROI). Why was it developed? When was it developed?88. Give two examples of financial information and nonfinancial information.89. Discuss the potential behavior implications of performance evaluation.CHAPTER 1 SOLUTIONSMANAGEMENT ACCOUNTING: INFORMATION THAT CREATES VALUETRUE/FALSELO1 1. a LO1 2. b LO1 3. b LO1 4. a LO1 5. aLO2 6. a LO2 7. b LO2 8. a LO3 9. a LO3 10. a LO3 11. b LO3 12. a LO3 13. a LO3 14. a LO3 15. a LO4 16. b LO4 17. a LO5 18. a LO5 19. b LO5 20. aLO5 21. b LO5 22. b LO6 23. a LO6 24. a LO6 25. b MULTIPLE CHOICELO1 26. dLO1 27. dLO1 28. aLO1 29. dLO1 30. aLO1 31. dLO1 32. aLO1 33. dLO1 34. bLO1 35. cLO1 36. bLO1 37. cLO1 38. bLO1 39. cLO1 40. cLO2 41. cLO2 42. bLO2 43. cLO2 44. aLO2 45. cLO2 46. aLO2 47. dLO3 48. dLO3 49. aLO3 50. dLO3 51. cLO3 52. aLO3 53. bLO3 54. cLO3 55. bLO3 56. aLO3 57. bLO3 58. cLO3 59. bLO3 60. aLO3 61. dLO3 62. dLO4 63. aLO4 64. dLO4 65. aLO4 66. cLO4 67. aLO4 68. bLO4 69. aLO5 70. bLO5 71. bLO5 72. aLO5 73. dLO6 74. aLO6 75. cLO6 76. dLO6 77. aLO6 78. bLO6 79. cLO6 80. aMULTIPLE CHOICE68. $2,000 / $40,000 = 5.00%69. $2,000 / $22,000 = 9.09%; $2,000 / $40,000 = 5.00%; $6,000 / $100,000 = 6.00%CRITICAL THINKING/ESSAYLO181. Describe management accounting and financial accounting.Solution: Management accounting provides information to internal decision makers of the business such as top executives. Its purpose is to help managers predict and evaluate future results. Reports are generated often and are usually broken down into smaller reportingdivisions such as department or product line. There are no rules to be complied with since these reports are for internal use only.Financial accounting provides information to external decision makers such as investors and creditors. Its purpose is to present a fair picture of the financial condition of thecompany. Reports are generated quarterly or annually and report on the company as awhole. The financial statements must comply with GAAP (generally accepted accounting principles). A CPA audits, or verifies, that the GAAP are being followed.LO182. What is the purpose of management accounting?Solution: Management accounting gathers short-term and long-term financial andnonfinancial information to plan, coordinate, motivate, improve, control, and evaluatesuccess factors of an organization. Management accounting converts data into usableinformation that supports strategic, operational, and control decision making.LO183. Briefly describe how managers make use of management accounting information.Solution: Managers use accounting information for three broad purposes.ONE: To plan business operations that includes preparing strategies and budgets anddetermining the prices and costs of products and services. A company must know the cost of each product and service to decide which products to offer and whether to expand ordiscontinue product lines.TWO: To control business operations that includes comparing actual results to thebudgeted results and taking corrective action when needed.THREE: To evaluate performance.84. Describe the value proposition and the elements that comprise it.Solution: The value proposition is what an organization tries to deliver to its targetcustomers – it defines the organizational strategy.The four elements are cost, quality, functionality and features, and service.•Cost is the price paid by the customer, given the product features and competitor’s prices.•Quality is the degree of conformance between what the customer is promised and what the customer receives.•Functionality and features refers to the performance of the product. For example: A meal in a restaurant provides the diner with the level of satisfaction expected for the price paid.•Service is all of the other elements of the product. For example: How the customer is treated at the time of the purchase.LO385. Is financial accounting or management accounting more useful to an operations manager?Why?Solution: Management accounting is more useful to an operations manager becausemanagement accounting reports operating results by department or unit rather than for the company as a whole, it includes financial as well as nonfinancial data such as on-timedeliveries and cycle times, and it includes quantitative as well as qualitative data such as the type of rework that was needed on defective units.LO386. What role has the increasingly competitive business environment played in thedevelopment of management accounting?Solution: The competitive environment has changed dramatically. There has been aderegulation movement in North America and Europe during the 1970s and 1980s thatchanged the ground rules under which service companies operated. In addition,organizations encountered severe competition from overseas companies that offered high-quality products at low prices. There has been an improvement of operational controlsystems such that information is more current and provided more frequently. The nature of work has changed from controlling to informing. Firms are concerned aboutcontinuous improvement, employee empowerment, and total quality. Nonfinancialinformation has become a critical feedback measure. Finally, the focus of many firms is now on measuring and managing activities.87. Describe return on investment (ROI). Why was it developed? When was it developed?Solution: ROI = (operating income / sales) x (sales / investment)The ROI measure combines a profitability measure (operating income / sales) with a capital intensity measure (sales / investment) to provide a single measure of departmental anddivisional performance.ROI was developed in the early decades of the 1900s so that senior managers at multi-divisional diversified corporations, such as DuPont and General Motors, could evaluate the operating performance of their decentralized divisions.LO588. Give two examples of financial information and nonfinancial information.Solution: Financial information includes amounts that can be expressed in dollar amounts such as sales, net income, and total assets. It also includes ratios prepared using financial information such as increase in sales, return-on-sales, and return-on-investment.Nonfinancial information includes measures that are not expressed in dollar amounts. For example, nonfinancial measures of customer satisfaction include the number of repeatcustomers or ranked estimates of satisfaction levels. Nonfinancial measures of production quality include percent of on-time deliveries, the number of defects, production yield, and cycle times.LO689. Discuss the potential behavior implications of performance evaluation.Solution: As measurements are made on operations and, especially, on individuals and groups, the behavior of the individuals and groups are affected. People react to themeasurements being made. They will focus on those variables or the behavior beingmeasured and spend less attention on variables and behavior that are not measured. In addition, if managers attempt to introduce or redesign cost and performance measurement systems, people familiar with the previous system will resist. Management accountants must understand and anticipate the reactions of individuals to information andmeasurements. The design and introduction of new measurements and systems must be accompanied with an analysis of the likely reactions to the innovations.。

CHAPTER 5MANAGEMENT ACCOUNTING INFORMATIONFOR ACTIVITY AND PROCESS DECISIONSTRUE/FALSE1. Sunk costs are never relevant costs for decision making.a. Trueb. False2. An example of a sunk cost is the amount of a guaranteed contract that has not yet beenpaid.a. Trueb. False3. Personal employee responses are not critical considerations for the business decisionmaker.a. Trueb. False4. For decision-making, differential costs assist in choosing between alternatives.a. Trueb. False5. For a particular decision, differential revenues and costs are always relevant.a. Trueb. False6. A cost may be relevant for one decision, but not relevant for a different decision.a. Trueb. False7. Avoidable costs should be evaluated when deciding whether to discontinue a part, product,product line, or business segment.a. Trueb. False8. In make-or-buy decisions, facility-sustaining support costs are unavoidable if the facilitycan be converted to another use.a. Trueb. False9. For one-time-only special orders, flexible costs may be relevant but not capacity-relatedcosts.a. Trueb. False10. Bid prices and costs that are relevant for regular orders are the same costs that are relevantfor one-time-only special orders.a. Trueb. False11. When opportunity costs exist, they are always relevant.a. Trueb. False12. Depreciation allocated to a product line is a relevant cost when deciding to discontinue thatproduct.a. Trueb. False13. When replacing an old machine with a new machine, the book value of the old machine is arelevant cost.a. Trueb. False14. If a company is deciding whether to outsource a part, the reliability of the supplier is animportant factor to consider.a. Trueb. False15. Sometimes qualitative factors are the most important factors in make-or-buy decisions.a. Trueb. False16. If a company is deciding whether to outsource a part, the reliability of the supplier is animportant factor to consider.a. Trueb. False17. Outsourcing is risk-free to the manufacturer because the supplier now has the responsibilityof producing the part.a. Trueb. False18. The central goal of the facility layout design process is to streamline operations to increaseoperating income.a. Trueb. False19. In a process layout, batch production causes inventory costs.a. Trueb. False20. The reduction of setup costs makes smaller batch sizes more feasible.a. Trueb. False21. In batch processing, workers downstream can identify an upstream problem immediately.a. Trueb. False22. The theory of constraints focuses on long-term initiatives to increase operating income.a. Trueb. False23. A processing cycle efficiency (PCE) of 14% indicates better efficiency than a PCE of 50%.a. Trueb. False24. When using a just-in-time manufacturing, a problem anywhere in the system can stop allproduction.a. Trueb. False25. Implementing a just-in-time inventory system requires a major cultural change for anorganization.a. Trueb. False26. Global competition led to the development of international quality standards such as ISO9000 2000 Standards.a. Trueb. False27. External quality problems are expensive to fix.a. Trueb. False28. Experience shows that it is more expensive to prevent defects than to detect and repairthem.a. Trueb. FalseMULTIPLE CHOICE29. Sunk costs:a. are relevantb. are differentialc. have future implicationsd. are ignored when evaluating alternatives30. A computer system installed last year is an example of:a. a sunk costb. a relevant costc. a differential costd. an avoidable cost31. Costs that cannot be changed by any decision made now or in the future are:a. fixed costsb. indirect costsc. avoidable costsd. sunk costs32. For decision making, a listing of the relevant costs:a. will help the decision maker concentrate on the pertinent datab. will only include future costsc. will only include costs that differ among alternativesd. should include all of the above33. Which of the following costs are NEVER relevant in the decision-making process?a. capacity-relatedb. historical costsc. relevant costsd. variable costs34. When deciding to lease a new cutting machine or continue using the old machine, thefollowing costs are all relevant EXCEPT the:a. $50,000 cost of the old machineb. $20,000 cost of the new machinec. $10,000 selling price of the old machined. $3,000 annual savings in operating costs if the new machine is purchased35. In evaluating different alternatives, it is useful to concentrate on:a. flexible costsb. capacity-related costsc. total costsd. relevant costs36. Relevant costs of a make-or-buy decision include all EXCEPT:a. fixed salaries that will not be incurred if the part is outsourcedb. current direct material costs of the partc. special machinery for the part that has no resale valued. material-handling costs that can be eliminated37. Which of the following would NOT be considered in a make-or-buy decision?a. capacity-related costs that will no longer be incurredb. flexible costs of productionc. potential rental income from space occupied by the production aread. unchanged supervisory costs38. Relevant costs in a make-or-buy decision of a part include:a. setup overhead for the manufacture of the product using the outsourced partb. currently used manufacturing capacity that has alternative usesc. annual plant insurance costs that will remain the samed. corporate office costs that will be allocated differently39. When deciding to accept a one-time-only special order from a wholesaler, managementshould do all of the following EXCEPT:a. analyze product costsb. consider the impact of the special order on future prices of their productsc. determine whether excess capacity is availabled. verify past design costs for the product40. When there is excess capacity, it makes sense to accept a one-time-only special order forless than the current selling price when:a. incremental revenues exceed incremental costsb. additional capacity-related costs must be incurred to accommodate the orderc. the company placing the order is in the same market segment as your currentcustomersd. None of the above is correct.41. When deciding whether to discontinue a segment of a business, managers should focus on:a. equipment used by the segment that could become idleb. reallocation of corporate costsc. how total costs differ among alternativesd. operating income per unit of the discontinued segment42. Costs are relevant to a particular decision if they:a. are flexible costsb. are capacity-related costsc. differ across the alternatives being consideredd. remain unchanged across the alternatives being consideredTHE FOLLOWING INFORMATION APPLIES TO QUESTIONS 43 THROUGH 46. Flowers-For-Everyone is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. Information about the existing van and the new van follow:Existing van New vanOriginal cost $100,000 $180,000Annual operating cost $ 35,000 $ 20,000Accumulated depreciation $ 60,000 ---Current salvage value of the existing van $ 45,000 ---Remaining life 10 years 10 yearsSalvage value in 10 years $ 0 $ 0Annual depreciation $ 4,000 $ 18,00043. Sunk costs include:a. the original cost of the existing vanb. the original cost of the new vanc. the current salvage value of the existing vand. the annual operating cost of the new van44. Relevant costs for this decision include:a. the original cost of the existing vanb. accumulated depreciationc. the current salvage value of the existing vand. the salvage value in 10 years45. If Flowers-For-Everyone replaces the existing delivery van with the new one, over the next10 years operating income will:a. decrease by $180,000b. increase by $150,000c. decrease by $150,000d. None of the above is correct.46. Should Flowers-for-Everyone replace the existing van with the new van? What are thesavings or additional cost?a. Yes replace, net savings of $15,000b. Yes replace, net savings of $150,000c. No replace, additional costs of $120,000d. No replace, additional costs of $30,000THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 47 AND 48.Jim’s 5-year-old Geo Prizm requires repairs estimated at $3,000 to make it roadworthy again. His friend, Julie, suggested that he should buy a 5-year-old used Honda Civic instead for $3,000 cash. Julie estimated the following costs for the two cars:Geo Prizm Honda CivicAcquisition cost $15,000 $3,000Repairs $ 3,000 ---Annual operating costs(Gas, maintenance, insurance) $ 2,280 $2,10047. The cost(s) NOT relevant for this decision is(are):a. the acquisition cost of the Geo Prizmb. the acquisition cost of the Honda Civicc. the repairs to the Geo Prizmd. the annual operating costs of the Honda Civic48. What should Jim do? What are his savings in the first year?a. Buy the Honda Civic; $9,780b. Fix the Geo Prizm; $5,518c. Buy the Honda Civic; $180d. Fix the Geo Prizm; $5,280THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 49 THROUGH 51. Konrade’s Engine Company manufactures part TE456 used in several of its engine models. Monthly production costs for 1,000 units are as follows:Direct materials $ 40,000Direct labor 10,000Flexible support costs 30,000Capacity-related support costs 20,000Total costs $100,000It is estimated that 10% of the capacity-related support costs assigned to TE456 will no longer be incurred if the company purchases TE456 from the outside supplier. Konrade’s Engine Company has the option of purchasing the part from an outside supplier at $85 per unit.49. If Konrade’s Engine Company accepts the offer from the outside supplier, the monthlyavoidable costs (costs that will no longer be incurred) total:a. $ 82,000b. $ 98,000c. $ 50,000d. $100,00050. If Konrade’s Engine Company purchases 1,000 TE456 parts from the outside supplier permonth, then its monthly operating income will:a. increase by $2,000b. increase by $80,000c. decrease by $3,000d. decrease by $85,00051. The maximum price that Konrade’s Engine Company should be willing to pay the outsidesupplier is:a. $80 per TE456 partb. $82 per TE456 partc. $98 per TE456 partd. $100 per TE456 partTHE FOLLOWING INFORMATION APPLIES TO QUESTIONS 52 AND 53.Melodee’s Preserves currently makes jams and jellies and a variety of decorative jars used for packaging. An outside supplier has offered to supply all of the needed decorative jars. For this make-or-buy decision, a cost analysis revealed the following avoidable unit costs for the decorative jars:Direct materials $0.25Direct labor 0.03Unit-related support costs 0.10Batch-related support costs 0.12Product-sustaining support costs 0.22Facility-sustaining support costs 0.28Total cost per jar $1.0052. The relevant cost per jar is:a. $0.28 per jarb. $0.38 per jarc. $0.72 per jard. $1.00 per jar53. The maximum price that Melodee’s Preserves should be willing to pay for the decorativejars is:a. $0.28 per jarb. $0.38 per jarc. $0.72 per jard. $1.00 per jarTHE FOLLOWING INFORMATION APPLIES TO QUESTIONS 54 AND 55.Denly Company has three products, A, B, and C. The following information is available:Product A Product B Product C Sales $60,000 $90,000 $24,000Flexible costs 36,000 48,000 15,000Contribution margin 24,000 42,000 9,000Capacity-realted costs:Avoidable 9,000 18,000 6,000Unavoidable 6,000 9,000 5,400 Operating income $ 9,000 $15,000 $ (2,400) 54. Denly Company is thinking of dropping Product C because it is reporting a loss.Assuming Denly drops Product C and does not replace it, operating income will:a. increase by $2,400b. increase by $3,000c. decrease by $3,000d. decrease by $5,40055. Assuming Product C is discontinued and the space formerly used to produce Product C isrented for $12,000 per year, operating income will:a. increase by $6,600b. increase by $9,000c. increase by $12,000d. increase by $14,40056. Which of the following does NOT need to be considered when evaluating a make-or-buydecision?a. savings from an alternative use of the production equipmentb. the original cost of the production equipmentc. the quality of the supplier's productd. the reliability of the delivery schedule57. When making decisions:a. quantitative factors are the most importantb. qualitative factors are the most importantc. appropriate weight must be given to both quantitative and qualitative factorsd. both quantitative and qualitative factors are unimportant58. Employee morale at Dos Santos, Inc., is very high. This type of information is known as:a. a qualitative factorb. a quantitative factorc. a differential factord. an opportunity cost59. Which of following are risks of outsourcing the production of a part?a. unpredictable qualityb. unreliable deliveryc. unscheduled price increasesd. All of the above are risks of outsourcing.60. Which of the following minimize the risks of outsourcing?a. the use of short-term contracts that specify priceb. the responsibility for on-time delivery is now the responsibility of the supplierc. building close relationships with the supplierd. All of the above minimize the risks of outsourcing.61. When evaluating a make-or-buy decision, which of the following does NOT need to beconsidered?a. alternative uses of the production capacityb. the original cost of the production equipmentc. the quality of the supplier's productd. the reliability of the supplier's delivery schedule62. In __________, all similar equipment or functions are grouped together.a. a process layoutb. a product layoutc. cellular manufacturingd. just-in-time production63. Characteristics of a process layout include:a. continuous processingb. long production pathsc. small amounts of inventoryd. no work-in-process storage areas64. In _______, equipment is organized to accommodate the production of a specific product.a. a process layoutb. a product layoutc. cellular manufacturingd. just-in-time production65. Characteristics of a product layout include:a. raw materials and purchased parts are delivered directly to the production line wherethey are neededb. low-volume productionc. a U-shaped layoutd. small batches of unique products66. In __________, the plant is organized into areas where all machines used to manufacture agroup of similar products are close to each other.a. a process layoutb. a product layoutc. cellular manufacturingd. just-in-time production67. Characteristics of cellular manufacturing include:a. a layout that is usually circular like a cellb. increasing the number of employees needed to produce a productc. individual areas for employees so each can work independently without interruptiond. a flexible layout that can be easily adjusted to make a different product68. The theory of constraints:a. emphasizes long-term optimizationb. maintains that maximizing volume through production bottlenecks will increaseoperating incomec. helps managers make special one-time decisionsd. suggests that some component parts should be outsourced69. Constraints may include:a. the availability of direct materials in manufacturingb. linear square feet of display space for a retailerc. direct labor in the service industryd. All of the above are correct.THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 70 THROUGH 74. Braun’s Brakes manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply:Model X Model Y Model Z Selling price $50 $60 $70Direct materials 6 6 6Direct labor ($12 per hour) 12 12 24Variable support costs ($4 per machine-hour) 4 8 8Fixed support costs 10 10 1070. Which model has the greatest contribution margin per unit?a. Model Xb. Model Yc. Model Zd. both Models X and Y71. Which model has the greatest contribution margin per machine-hour?a. Model Xb. Model Yc. Model Zd. both Models Y and Z72. If there is excess capacity, which model is the most profitable to produce?a. Model Xb. Model Yc. Model Zd. both Models X and Y73. If there is a machine breakdown, which model is the most profitable to produce?a. Model Xb. Model Yc. Model Zd. both Models Y and Z74. How can Lisa Braun encourage her salespeople to promote the more profitable model?a. Put all sales persons on salary.b. Provide higher sales commissions for higher priced items.c. Provide higher sales commissions for items with the greatest contribution margin perconstrained resource.d. Both (b) and (c) are correct.75. High levels of inventory result in all EXCEPT:a. high moving, handling, and storage costsb. increased product obsolescence and damagec. increased financing costsd. idle facilities76. The implementation of just-in-time production results in all of the following EXCEPT:a. decreased cycle timesb. reduced amount of wastec. a slower pace for employeesd. structural changes77. Characteristics of just-in-time manufacturing include all of the following EXCEPT:a. the ability to process items in large batchesb. making a product only when the customer requires itc. no work-in-process inventoriesd. a problem anywhere can stop production78. Measures of JIT (just-in-time) manufacturing reliability include all of the followingEXCEPT:a. defect ratesb. labor and machine utilization ratiosc. cycle timesd. percent of on-time deliveries79. Of the four quality costing categories, the most damaging category to the organization is:a. prevention costsb. appraisal costsc. internal failure costsd. external failure costs80. __________ are incurred when a defective component is discovered before shipment to thecustomer.a. Prevention costsb. Appraisal costsc. Internal failure costsd. External failure costs81. _________ are incurred when a customer discovers a defect.a. Prevention costsb. Appraisal costsc. Internal failure costsd. External failure costs82. Training employees in methods to maintain quality is an example of __________.a. prevention costsb. appraisal costsc. internal failure costsd. external failure costs83. __________ include the cost of raw-materials inspections and assembly-line inspections.a. Prevention costsb. Appraisal costsc. Internal failure costsd. External failure costsThe following estimates have been prepared to evaluate the benefits from the reorganization:Before the change After the change Total annual sales $600,000 $800,000Costs as a percentage of sales:Direct materials 23% 20%Direct labor 9% 7%Support costs 18% 13% Work-in-process inventory $125,000 $ 90,000 Inventory carrying costs are estimated to be 10% per year.84. As a result of the layout reorganization, reduced levels of work-in-process inventory areprojected to decrease inventory carrying costs by:a. $12,500b. $ 9,000c. $ 6,000d. $ 3,50085. As a result of the layout reorganization, incremental manufacturing costs are projected to:a. increase by $84,000b. increase by $20,000c. decrease by $20,000d. decrease by $16,50086. As a result of switching to a cellular manufacturing operation, total benefits are projected toincrease by:a. $216,500b. $200,000c. $183,500d. $176,50087. After the change, a decreased amount of work-in-process inventory is projected because:a. of reduced cycle times resulting from a more continuous production flowb. of lower financing costs and the reduced need for storage and handlingc. larger batches can be processed faster and more efficientlyd. All of the above are correct.88. After the change, direct labor costs as a percentage of sales are projected to decreasebecause:a. less work-in-process inventory needs to be moved from location to locationb. fewer employees are needed to produce a product due to the new work designc. less supervisors are needed to oversee operationsd. All of the above are correct.The following estimates have been prepared to evaluate the benefits from the reorganization:Before the change After the change Total annual sales $500,000 $750,000Costs as percentage of sales:Direct materials 20% 17%Direct labor 8% 7%Support costs 12% 6% Work-in-process inventory $100,000 $ 80,000 Inventory carrying costs are estimated to be 11% per year.89. As a result of the layout reorganization, reduced levels of work-in-process inventory areprojected to decrease inventory carrying costs by:a. $ 2,200b. $ 7,500c. $ 8,800d. $11,00090. As a result of the layout reorganization, incremental manufacturing costs are projected to:a. decrease by $22,800b. decrease by $25,000c. increase by $25,000d. increase by $40,00091. As a result of switching to a cellular manufacturing operation, total benefits are projected toincrease by:a. $222,800b. $227,200c. $272,800d. $277,20092. After the change, sales are projected to increase because:a. of shorter delivery lead timesb. of higher sales pricesc. of the ability to process larger batch sizesd. All of the above are correct.93. After the change, work-in-process carrying costs are projected to decrease because of:a. reduced costs in materials handlingb. lower financing costsc. the decreased need for inventory storaged. All of the above are correct.EXERCISE / PROBLEM94. Karen’s Cookie Company is considering replacing its giant cookie mixer with a new one.The following data have been compiled to evaluate the decision.Existing NewOriginal cost $8,000 $10,000Annual operating cost $4,000 $2,200Remaining life 5 years 5 yearsDisposal value now $3,000 ---Required:a. What costs are relevant?b. What costs are sunk?c. What are the net cash flows assuming Karen’s Cookie Company purchases the newcookie mixer?95. Pat, a Pizzeria manager, replaced the convection oven just six months ago. Today, TurboOvens Manufacturing announced the availability of a new convection oven that cooksmore quickly with lower operating expenses. Pat is considering the purchase of this faster, lower-operating cost, convection oven to replace the existing one they recently purchased.Selected information about the two ovens is given below:Existing New Turbo OvenOriginal cost $60,000 $50,000Accumulated depreciation $ 5,000 ---Current salvage value $40,000 ---Remaining life 5 years 5 yearsAnnual operating expenses $10,000 $ 7,500Disposal value in 5 years $ 0 $ 0 Required:a. What costs are sunk?b. What costs are relevant?c. What are the net cash flows over the next 5 years assuming the Pizzeria purchases thenew convection oven?d. What other items should Pat, as manager of the Pizzeria, consider when making thisdecision?96. Quiett Truck manufactures part WB23 used in several of its truck models. 10,000 units areproduced each year with production costs as follows:Direct materials $ 45,000Direct labor 15,000Flexible support costs 35,000Capacity-related support costs 25,000Total costs $120,000Quiett Truck has the option of purchasing part WB23 from an outside supplier at $11.20 per unit. If WB23 is outsourced, 40% of the capacity-related costs cannot be immediately converted to other uses.Required:a. Describe avoidable costs. What amount of the WB23 production costs is avoidable?b. Should Quiett Truck outsource WB23? Why or why not?c. What other items should Quiett Truck consider before outsourcing any of the parts itcurrently manufactures?97. Freddie’s Fudge Factory currently makes fudge for retail and mail order customers. It alsooffers a variety of roasted nuts. Fudge sales have increased over the past year, so Freddie is considering outsourcing the roasted nuts and using the roasting space to make additional fudge. A reliable supplier has quoted a price of $0.85 per pound for the roasted nuts. The following amounts reflect the in-house manufacturing costs per pound for the roasted nuts: Direct materials $0.50Direct labor 0.06Unit-related support costs 0.10Batch-related support costs 0.04Product-sustaining support costs 0.05Facility-sustaining support costs 0.15Total cost per pound $0.90Required:a. Should Freddie’s Fudge Factory outsource the roasted nuts? Why or why not? Discussall items that should be considered.b. What incentives can Freddie offer the supplier of the roasted nuts to encouragecontinued reliability?98. Kirkland Company manufactures a part for use in its production. When 10,000 itemsare produced, the costs per unit are:Direct materials $0.60Direct manufacturing labor 3.00Flexible manufacturing support 1.20Fixed manufacturing support 1.60Total $6.40Mike Company has offered to sell to Kirkland Company 10,000 units of the part for $6.00 per unit. The plant facilities could be used to manufacture another item at a savings of $9,000 if Kirkland accepts the offer. In addition, $1.00 per unit of fixed manufacturing support on the original item would be eliminated.Required:a. What is the relevant per unit cost for the original part?b. Which alternative is best for Kirkland Company? By how much?99. Lewis Auto Company manufactures a part for use in its production of automobiles.When 10,000 items are produced, the costs per unit are:Direct materials $ 12Direct manufacturing labor 60Flexible manufacturing support 24Fixed manufacturing support 32Total $128Monty Company has offered to sell Lewis Auto Company 10,000 units of the part for$120 per unit. The plant facilities could be used to manufacture another part at asavings of $180,000 if Lewis Auto accepts the supplier’s of fer. In addition, $20 per unit of fixed manufacturing support on the original part would be eliminated.Required:a. What is the relevant per unit cost for the original part?b. Which alternative is best for Lewis Auto Company? By how much?100. Carey Manufacturing, Inc., is considering reorganizing its plant into manufacturing cells.The following estimates have been prepared to evaluate the benefits from thereorganization:Before the change After the change Total annual sales $700,000 $850,000Costs as percentage of sales:Direct materials 10% 9%Direct labor 6% 4%Support costs 9% 7% Work-in-process inventory $200,000 $120,000 Inventory carrying costs are estimated to be 12% per year.Required:a. Why do the layout reorganization estimates include1. a decrease in work-in-process inventory?2. a decrease in direct material costs as a percentage of sales?3. an increase in sales?b. As a result of the layout reorganization, what amount of change is projected1. from carrying reduced levels of work-in-process inventory?2. for incremental manufacturing costs?3. in total benefits?。

《管理会计》习题2019年8月第九章标准成本法一、名词解释标准成本控制标准成本成本差异价格标准数量差异二、判断题1、标准成本制度不仅可以用于制造类企业，也可以用于服务类企业。

（）2、直接人工效率差异、变动性制造费用效率差异和固定性制造费用效率差异三者形成的原因是相同的，只是程度不同。

（）3、直接材料价格差异、直接人工工资率差异和变动性制造费用分配率差异属价格差异。

（）4、直接人工效率差异和变动性制造费用分配率差异属价格差异。

（）5、固定性制造费用效率差异是指单位产品耗用工时差异对固定性制造费用成本差异的影响。

（）6、在成本差异分析中，数量差异的大小是由用量脱离标准的程度以及实际价格高低决定的。

（）三、单项选择题（每题只有一个正确答案）在标准成本控制下的成本差异是指（）。

A、实际成本与标准成本的差异B、实际成本与计划成本的差异C、预算成本与标准成本的差异D、实际成本与预算成本的差异2、下列选项中，属于标准成本控制系统前提和关键的是（）。

A、标准成本的制定B、成本差异的分析C、成本差异的计算D、成本差异的账务处理3、固定性制造费用的实际金额与预算金额之间的差额称为（）。

A、预算差异B、能量差异C、效率差异D、闲置能量差异4、标准成本控制的重点是（）。

A、标准成本的制定B、成本差异的计算分析C、成本控制D、成本差异的账务处理5、实际工作中运用最广泛的一种标准成本是（）。

A、理想的标准成本B、宽松的标准成本C、现实的标准成本D、正常的标准成本6、下列属于用量标准的是（）。

A、材料消耗量B、小时工资率C、原材料价格D、小时制造费用率7、在标准成本制度下，分析计算各成本项目价格差异的用量基础是（）。

A、标准产量下的标准用量B、实际产量下的标准用量C、标准产量下的实际用量D、实际产量下的实际用量8、本月生产A产品8000件，实际耗用甲材料32000公斤，其实际价格为每公斤40元。

该产品甲材料的用量标准为3公斤，价格标准为45元，其直接材料用量差异为（）元。

CHAPTER 9standard costing:a managerial control toolQUESTIONS FOR WRITING AND DISCUSSION1.Standard costs are essentially budgetedamounts on a per-unit basis. Unit standardsserve as inputs in building budgets.2.Unit standards are used to build flexiblebudgets. Unit standards for variable costsare the variable cost component of a flexiblebudgeting formula.3.The quantity decision is determining howmuch input should be used per unit of out-put. The pricing decision determines howmuch should be paid for the quantity of inputused.4.Historical experience is often a poor choicefor establishing standards because the his-torical amounts may include more inefficien-cy than is desired.5.Engineering studies can serve as importantinput to standard setting. Many feel that thisapproach by itself may produce standardsthat are too rigorous.6.Ideal standards are perfection standards,representing the best possible outcomes.Currently attainable standards are standardsthat are challenging but allow some waste.Currently attainable standards are oftenchosen because many feel they tend to mo-tivate rather than frustrate.7.Standard costing systems improve planningand control and facilitate product costing. 8.By identifying standards and assessing devi-ations from the standards, managers can lo-cate areas where change or corrective be-havior is needed.9.Actual costing assigns actual manufacturingcosts to products. Normal costing assignsactual prime costs and estimated overheadcosts to products. Standard costing assignsestimated manufacturing costs to products.10. A standard cost sheet presents the standardamount of and price for each input and usesthis information to calculate the unit standardcost. 11.Managers generally tend to have more con-trol over the quantity of an input used ratherthan the price paid per unit of input.12. A standard cost variance should be investi-gated if the variance is material and if thebenefit of investigating and correcting thedeviation is greater than the cost.13.Control limits indicate how large a variancemust be before it is judged to be materialand the process is out of control. Control lim-its are usually set by judgment although sta-tistical approaches are occasionally used. 14.The materials price variance is often com-puted at the point of purchase rather than is-suance because it provides control infor-mation sooner.15.Disagree. A materials usage variance canbe caused by factors beyond the control ofthe production manager, e.g., purchase of alower-quality material than normal.16.Disagree. Using higher-priced workers toperform lower-skilled tasks is an example ofan event that will create a rate variance thatis controllable.17.Some possible causes of an unfavorablelabor efficiency variance are inefficient labor,machine downtime, and poor quality materi-als.18.Part of a variable overhead spending vari-ance can be caused by inefficient use ofoverhead resources.19.Agree. This variance, assuming that variableoverhead costs increase as labor usage in-creases, is caused by the efficiency or ineffi-ciency of labor usage.20.Fixed overhead costs are either committedor discretionary. The committed costs willnot differ by their very nature. Discretionarycosts can vary, but the level the companywants to spend on these items is decided atthe beginning and usually will be met unlessthere is a conscious decision to change thepredetermined levels.21.The volume variance is caused by the actualvolume differing from the expected volumeused to compute the predetermined stand-ard fixed overhead rate. If the actual volumeis different from the expected, then the com-pany has either lost or earned a contributionmargin. The volume variance signals thisoutcome, and if the variance is large, thenthe loss or gain is large since the volumevariance understates the effect.22.The spending variance is more important.This variance is computed by comparing ac-tual expenditures with budgeted expendi-tures. The volume variance simply tellswhether the actual volume is different fromthe expected volume.EXERCISES 9–11. d2. e3. d4. c5. e6. a9–21. a. The operating personnel of each cost center should be involved in settingstandards. They are the primary source for quantity information. The mate-rials manager and purchasing manager are a source of information for ma-terial prices, and personnel are knowledgeable on wage information. The Accounting Department should be involved in overhead standards and should provide information about past prices and usage. Finally, if infor-mation about absolute efficiency is desired, industrial engineers can pro-vide important input.b. Standards should be attainable; they should include an allowance forwaste, breakdowns, etc. Market prices for materials as well as labor (un-ions) should be a consideration for setting standards. Labor prices should include fringe benefits, and material prices should include freight, taxes, etc.2. In principle, before formal responsibility is assigned, the causes of the vari-ances must be known. To be responsible, a manager must have the ability to control or influence the variance. The following assignments of responsibility are general in nature and have exceptions:MPV: Purchasing managerMUV: Production managerLRV: Production managerLEV: Production managerOH variances: Departmental managers1. SH = 0.8 ⨯ 95,000 = 76,000 hours2. SQ = 5 ⨯ 95,000 = 475,000 components9–41. MPV = (AP – SP)AQ= ($0.03 – $0.032)6,420,000 = $12,840 FMUV = (AQ – SQ)SP= (6,420,000 – 6,400,000)$0.032 = $640 U2. LRV = (AR – SR)AH= ($12.50 – $12.00)2,000 = $1,000 UL EV = (AH – SH)SR= (2,000 – 1,850)$12.00 = $1,800 U9–51. Variable overhead analysis:Actual VOH Budgeted VOH Applied VOH2. Fixed overhead analysis:Actual FOH Budgeted FOH Applied FOH1. Materials: $60 ⨯ 20,000 = $1,200,000L abor: $21 ⨯ 20,000 = $420,0002. Actual Cost* Budgeted Cost VarianceMaterials $1,215,120 $1,200,000 $ 15,120 U Labor 390,000 420,000 30,000 F *$122,000 ⨯ $9.96; 31,200 ⨯ $12.503. MPV = (AP – SP)AQ= ($9.96 – $10)122,000 = $4,880 FMUV = (AQ – SQ)SP= (122,000 – 120,000)$10 = $20,000 UAP ⨯ AQ SP ⨯ AQ SP ⨯ SQ4. LRV = (AR – SR)AH= ($12.50 – $14)31,200 = $46,800 FLEV = (AH – SH)SR= (31,200 – 30,000)$14 = $16,800 UAR ⨯ AH SR ⨯ AH SR ⨯ SH1. MPV = (AP – SP)AQ= ($8.35 – $8.25)114,000 = $11,400 UMUV = (AQ – SQ)SP= (112,500 – 115,200)$8.25 = $22,275 F(A three-pronged variance diagram is not shown because MPV is for mate-rials purchased and not materials used.)2. LRV = (AR – SR)AH= ($9.80 – $9.65)37,560 = $5,634 UNote: AR = $368,088/37,560LEV = (AH – SH)SR= (37,560 – 38,400)$9.65 = $8,106 FAR ⨯ AH SR ⨯ AH SR ⨯ SH3. Materials Inventory ................................... 940,500M PV ............................................................ 11,400Accounts Payable ............................... 951,900Work in Process ....................................... 950,400MUV ...................................................... 22,275Materials Inventory .............................. 928,125Work in Process ....................................... 370,560LRV ............................................................ 5,634LEV ....................................................... 8,106Accrued Payroll ................................... 368,0881. Fixed overhead rate = $0.55/(1/2 hr. per unit) = $1.10 per DLHSH = 1,180,000 ⨯ 1/2 = 590,000Applied FOH = $1.10 ⨯ 590,000 = $649,0002. Fixed overhead analysis:Actual FOH Budgeted FOH Applied FOH(600,000 expected hours = 1/2 hour ⨯ 1,200,000 units)3. Variable OH rate = ($1,350,000 – $660,000)/600,000= $1.15 per DLH4. Variable overhead analysis:Actual VOH Budgeted VOH Applied VOH1. Cases needing investigation:Week 2: Exceeds the 10% rule.Week 4: Exceeds the $8,000 rule and the 10% rule.Week 5: Exceeds the 10% rule.2. The purchasing agent. Corrective action would require a return to the pur-chase of the higher-quality material normally used.3. Production engineering is responsible. If the relationship is expected to per-sist, then the new labor method should be adopted, and standards for materi-als and labor need to be revised.9–101. Standard fixed overhead rate = $2,160,000/(120,000 ⨯ 6)= $3.00 per DLHStandard variable overhead rate = $1,440,000/720,000= $2.00 per DLH2. Fixed: 119,000 ⨯ 6 ⨯ $3.00 = $2,142,000Variable: 119,000 ⨯ 6 ⨯ $2.00 = $1,428,000Total FOH variance = $2,250,000 – $2,142,000= $108,000 UTotal VOH variance = $1,425,000 – $1,428,000= $3,000 F3. Fixed overhead analysis:Actual FOH Budgeted FOH Applied FOHThe spending variance is the difference between planned and actual costs.Each item’s variance should be analyzed to see if these costs can be r e-duced. The volume variance is the incorrect prediction of volume, or alterna-tively, it is a signal of the loss or gain that occurred because of producing at a level different from the expected level.4. Variable overhead analysis:Actual VOH Budgeted VOH Applied VOHThe variable overhead spending variance is the difference between the actual variable overhead costs and the budgeted costs for the actual hours used.The variable overhead efficiency variance is the savings or extra cost at-tributable to the efficiency of labor usage.9–111. MPV = (AP – SP)AQ= ($6.60 – $6.40)1,488,000= $297,600 UMUV = (AQ – SQ)SP= (1,480,000 – 1,400,000)$6.40= $512,000 UNote: There is no three-pronged analysis for materials because materials purchased is different from the materials used. (MPV uses materials pur-chased and MUV uses materials used.)2. LRV = (AR – SR)AH= ($18.10 – $18.00)580,000= $58,000 ULEV = (AH – SH)SR= (580,000 – 560,000)$18.00= $360,000 UAR ⨯ AH SR ⨯ AH SR ⨯ SH3. Fixed overhead analysis:Actual FOH Budgeted FOH Applied FOHNote: Practical volume in hours = 2 ⨯ 288,000 = 576,000 hours4. Variable overhead analysis:Actual VOH Budgeted VOH Applied VOH1. Materials Inventory ................................... 9,523,200MPV ............................................................ 297,600Accounts Payable ............................... 9,820,8002. Work in Process ....................................... 8,960,000MUV ............................................................ 512,000Materials Inventory .............................. 9,472,0003. Work in Process ....................................... 10,080,000LRV ............................................................ 58,000LEV ............................................................. 360,000Accrued Payroll ................................... 10,498,0004. Work in Process ....................................... 3,080,000Fixed Overhead Control...................... 2,240,000Variable Overhead Control ................. 840,0005. Materials and labor:Cost of Goods Sold .................................. 1,227,600MPV ...................................................... 297,600MUV ...................................................... 512,000LRV ....................................................... 58,000LEV ....................................................... 360,000 Overhead disposition:Cost of Goods Sold .................................. 160,000Fixed Overhead Control...................... 160,000Cost of Goods Sold .................................. 32,000Variable Overhead Control ................. 32,0001. Tom purchased the large quantity to obtain a lower price so that the pricestandard could be met. In all likelihood, given the reaction of Jackie Iverson, encouraging the use of quantity discounts was not an objective of setting price standards. Usually, material price standards are to encourage the pur-chasing agent to search for sources that will supply the quantity and quality of material desired at the lowest price.2. It sounds like the price standard may be out of date. Revising the pricestandard and implementing a policy concerning quantity purchases would likely prevent this behavior from reoccurring.3. Tom apparently acted in his own self-interest when making the purchase. Hesurely must have known that the quantity approach was not the objective.Yet, the reward structure suggests that there is considerable emphasis placed on meeting standards. His behavior, in part, was induced by the re-ward system of the company. Probably, he should be retained with some ad-ditional training concerning the goals of the company and a change in em-phasis and policy to help encourage the desired behavior.9–14Materials:AP ⨯ AQ SP ⨯ AQ SP ⨯ SQLabor:AR ⨯ AH SR ⨯ AH SR ⨯ SH1. Materials Inventory ................................... 47,700MPV ...................................................... 5,700Accounts Payable ............................... 42,0002. Work in Process ....................................... 45,000MUV ............................................................ 2,700Materials Inventory .............................. 47,7003. Work in Process ....................................... 105,000LRV ....................................................... 2,300LEV (700)Accrued Payroll ................................... 102,0004. Cost of Goods Sold .................................. 2,700MUV ...................................................... 2,700MPV ............................................................ 5,700LRV ............................................................ 2,300LEV (700)Cost of Goods Sold ............................. 8,7001. VOH efficiency variance = (AH – SH)SVOR$8,000 = (1.2SH – SH)$2$8,000 = $0.4SHSH = 20,000AH = 1.2SH = 24,000 2. LEV = (AH – SH)SR$20,000 = (24,000 – 20,000)SR$20,000 = 4,000SRSR = $5LRV = (AR – SR)AH$6,000 = (AR – $5)24,000$0.25 = AR – $5AR = $5.253. SH = 4 ⨯ Units produced20,000 = 4 ⨯ Units produced Units produced = 5,000PROBLEMS9–171. Materials:AP ⨯ AQ SP ⨯ AQ SP ⨯ SQThe new process saves 0.25 ⨯ 4,000 ⨯ $3 = $3,000. Thus, the net savings at-tributable to the higher-quality material are ($6,000 – $3,000) – $2,300 = $700.Keep the higher-quality material!2. Labor for new process:AR ⨯ AH SR ⨯ AH SR ⨯ SHThe new process gains $3,000 in materials (see Requirement 1) but loses $6,000 from the labor effect, giving a net loss of $3,000. If this pattern is ex-pected to persist, then the new process should be abandoned.3. Labor for new process, one week later:AR ⨯ AH SR ⨯ AH SR ⨯ SHIf this is the pattern, then the new process should be continued. It will save $260,000 per year ($5,000 ⨯52 weeks). The weekly savings of $5,000 is the materials savings of $3,000 plus labor savings of $2,000.9–181. e2. h3. k4. n5. d6. g7. o8. b9. m10. l11. j12. c13. a14. i15. f9–191. Material quantity standards:1.25 feet per cutting board⨯ 67.50 feet for five good cutting boardsUnit standard for lumber = 7.50/5 = 1.50 feetUnit standard for foot pads = 4.0Material price standards:Lumber: $3.00 per footPads: $0.05 per padLabor quantity standards:Cutting: 0.2 hrs. ⨯ 6/5 = 0.24 hours per good unitAttachment: 0.25 hours per good unitUnit labor standard 0.49 hours per good unit Labor rate standard: $8.00 per hourStandard prime cost per unit:Lumber (1.50 ft. @ $3.00) $4.50Pads (4 @ $0.05) 0.20Labor (0.49 hr. @ $8.00) 3.92Unit cost $8.629–19 Concluded2. Standards allow managers to compare planned and actual performance. Thedifference can be broken down into price and efficiency variances to identify the cause of a variance. With this feedback, managers are able to improve productivity as they attempt to produce without cost overruns.3. a. The purchasing manager identifies suppliers and their respective pricesand quality of materials.b. The industrial engineer often conducts time and motion studies to deter-mine the standard direct labor time for a unit of product. They also can de-termine how much material is needed for the product.c. The cost accountant has historical information as well as current infor-mation from the purchasing agent, industrial engineers, and operating personnel. He or she can compile this information to obtain an achievable standard.4. Lumber:MPV = (AP – SP)AQ= ($3.10 – $3.00)16,000 = $1,600 UMUV = (AQ – SQ)SP= (16,000 – 15,000)$3 = $3,000 URubber pads:MPV = (AP – SP)AQ= ($0.048 – $0.05)51,000 = $102 FMUV = (AQ – SQ)SP= (51,000 – 40,000)$0.05 = $550 ULabor:LRV = (AR – SR)AH= ($8.05 – $8.00)5,550 = $277.50 ULEV = (AH – SH)SR= (5,550 – 4,900)$8 = $5,200 U9–201. The cumulative average time per unit is an average. It includes the2.5 hoursper unit when 40 units are produced as well as the 1.024 hours per unit when 640 units are produced. As more units are produced, the cumulative average time per unit will decrease.2. The standard should be 0.768 hour per unit as this is the average time takenper unit once efficiency is achieved:[(1.024 ⨯ 640) – (1.28 ⨯ 320)]/(640 – 320)3. Std. Price Std. Usage Std. CostDirect materials $ 4 25.000 $100.00 Direct labor 15 0.768 11.52 Variable overhead 8 0.768 6.14 Fixed overhead 12 0.768 9.22* Standard cost per unit $126.88* *Rounded4. There would be unfavorable efficiency variances for the first 320 units be-cause the standard hours are much lower than the actual hours at this level.Actual hours would be approximately 409.60 (320 ⨯ 1.28), and standard hours would be 245.76 (320 ⨯ 0.768).9–211. MPV = (AP – SP)AQ= ($4.70 – $5.00)260,000 = $78,000 FMUV = (AQ – SQ)SP= (320,000 – 300,000)$5 = $100,000 UThe materials usage variance is viewed as the most controllable because prices for materials are often market-driven and thus not controllable. Re-sponsibility for the variance in this case likely would be assigned to purchas-ing. The lower-quality materials are probably the cause of the extra usage.2. LRV = (AR – SR)AH= ($13 – $12)82,000 = $82,000 ULEV = (AH – SH)SR= (82,000 – 80,000)$12 = $24,000 UAR ⨯ AH SR ⨯ AH SR ⨯ SHProduction is usually responsible for labor efficiency. In this case, efficiency may have been affected by the lower-quality materials, and purchasing, thus, may have significant responsibility for the outcome. Other possible causes are less demand than expected, poor supervision, lack of proper training, and lack of experience.3. Variable overhead variances:Actual VOH Budgeted VOH Applied VOHFormula approach:VOH spending variance = Actual VOH – (SVOR ⨯ AH)= $860,000 – ($10 ⨯ 82,000)= $40,000 UVOH efficiency variance = (AH – SH)SVOR= (82,000 – 80,000)$10= $20,000 U4. Fixed overhead variances:Actual FOH Budgeted FOH Applied FOHThe volume variance is a measure of unused capacity. This cost is reduced as production increases. Thus, selling more goods is the key to reducing this variance (at least in the short run).5. Four variances are potentially affected by material quality:MPV $ 78,000 FMUV 100,000 ULEV 24,000 UVOH efficiency 20,000 U$ 66,000 UIf the variance outcomes are largely attributable to the lower-quality materi-als, then the company should discontinue using this material.6. (Appendix required)Materials Inventory ................................... 1,300,000MPV ...................................................... 78,000Accounts Payable ............................... 1,222,000Work in Process ....................................... 1,500,000MUV ............................................................ 100,000Materials Inventory .............................. 1,600,0009–21 ConcludedWork in Process ....................................... 960,000LRV ............................................................ 82,000LEV ............................................................. 24,000Accrued Payroll ................................... 1,066,000Cost of Goods Sold .................................. 206,000MUV ...................................................... 100,000LRV ....................................................... 82,000LEV ....................................................... 24,000MPV ............................................................ 78,000Cost of Goods Sold ............................. 78,000VOH Control .............................................. 860,000Various Credits .................................... 860,000FOH Control .............................................. 556,000Various Credits .................................... 556,000Work in Process ....................................... 800,000VOH Control ......................................... 800,000Work in Process ....................................... 480,000FOH Control ......................................... 480,000Cost of Goods Sold .................................. 60,000VOH Control ......................................... 60,000Cost of Goods Sold .................................. 76,000FOH Control ......................................... 76,0009–221. Fixed overhead rate = $2,400,000/600,000 hours*= $4 per hour*Standard hours allowed = 2 ⨯ 300,000 units2. Little Rock plant:Actual FOH Budgeted FOH Applied FOHAthens plant:Actual FOH Budgeted FOH Applied FOHThe spending varian ce is almost certainly caused by supervisor’s salaries (for example, an unexpected midyear increase due to union pressures). It is unlikely that the lease payments or depreciation would be greater than budg-eted. Changing the terms on a 10-year lease in the first year would be unusual (unless there is some sort of special clause permitting increased payments for something like unexpected inflation). Also, the depreciation should be on target (unless more equipment was purchased or the depreciation budget was set before the price of the equipment was known with certainty).The volume variance is easy to explain. The Little Rock plant produced less than expected, and so there was an unused capacity cost: $4 ⨯ 120,000 hours = $480,000. The Athens plant had no unused capacity.9–22 Concluded3. It appears that the 120,000 hours of unused capacity (60,000 subassemblies)is permanent for the Little Rock plant. This plant has 10 supervisors, each making $50,000. Supervision is a step-cost driven by the number of produc-tion lines. Unused capacity of 120,000 hours means that two lines can be shut down, saving the salaries of two supervisors ($100,000 at the original salary level). The equipment for the two lines is owned. If it could be sold, then the money could be reinvested, and the depreciation charge would be reduced by20 percent (two lines shut down out of 10). There is no way to directly reducethe lease payments for the building. Perhaps the company could use the space to establish production lines for a different product. Or perhaps the space could be subleased. Another possibility is to keep the supervisors and equipment and try to fill the unused capacity with special orders orders for the subassembly below the regular selling price from a market not normally served. If the selling price is sufficient to cover the variable costs and cover at least the salaries and depreciation for the two lines, then the special order option may be a possibility. This option, however, is fraught with risks, e.g., the risk of finding enough orders to justify keeping the supervisors and equipment, the risk of alienating regular customers who pay full price, and the risk of violating price discrimination laws. Note:You may wish to point out the value of the resource usage model in answering this question (see Chapter 3).4. For each plant, the standard fixed overhead rate is $4 per direct labor hour.Since each subassembly should use two hours, the fixed overhead cost per unit is $8, regardless of where they are produced. Should they differ? Some may argue that the rate for the Little Rock plant needs to be recalculated. For example, one possibility is to use expected actual capacity, instead of practi-cal capacity. In this case, the Little Rock plant would have a fixed overhead rate of $2,400,000/480,000 hours = $5 per hour and a cost per subassembly of $10. The question is: Should the subassemblies be charged for the cost of the unused capacity? ABC suggests a negative response. Products should be charged for the resources they use, and the cost of unused capacity should be reported as a separate item—to draw management’s attention to the need to manage this unused capacity.9–231. Normal Patient Day:Standard Standard StandardPrice Usage Cost Direct materials $10.00 8.00 lb. $ 80.00 Direct labor 16.00 2 hr. 32.00 Variable overhead 30.00 2 hr. 60.00 Fixed overhead 40.00 2 hr. 80.00 Unit cost $252.00 Cesarean Patient Day:Standard Standard StandardPrice Usage Cost Direct materials $10.00 20.00 lb. $200.00 Direct labor 16.00 4 hr. 64.00 Variable overhead 30.00 4 hr. 120.00 Fixed overhead 40.00 4 hr. 160.00 Unit cost $544.00 2. MPV = (AP – SP)AQ= ($9.50 – $10.00)172,000 = $86,000 FMUV = (AQ – SQ)SPMUV (Normal) = [30,000 – (8 ⨯ 3,500)]$10 = $20,000 UMUV (Cesarean) = [142,000 – (20 ⨯ 7,000)]$10 = $20,000 UMaterials .................................................... 1,720,000MPV ...................................................... 86,000Accounts Payable ............................... 1,634,000Work in Process ....................................... 1,680,000M UV ........................................................... 40,000Materials .............................................. 1,720,000MPV ............................................................ 86,000MUV ............................................................ 40,000Cost of Services Sold ......................... 126,0003. LRV = (AR – SR)AH= ($15.90 – $16.00)36,500 = $3,650 FLEV = (AH – SH)SRLEV (Normal) = [7,200 – (2 ⨯ 3,500)]$16 = $3,200 ULEV (Cesarean) = [29,300 – (4 ⨯ 7,000)]$16 = $20,800 UWork in Process ....................................... 560,000*LEV ............................................................. 24,000LRV ....................................................... 3,650Accrued Payroll ................................... 580,350 *[(2 ⨯ 3,500) + (4 ⨯ 7,000)] ⨯ $16 = $560,000Cost of Services Sold ............................... 20,350LRV ............................................................ 3,650LEV ....................................................... 24,0004. Variable overhead variances:Actual VOH Budgeted VOH Applied VOHFixed overhead variances:Actual FOH Budgeted FOH Applied FOHNote: SH = (2 ⨯ 3,500) + (4 ⨯ 7,000) = 35,000。