ACCT 4100 Exam 1 Questions and Answers: Strategic Management and Accounting Concepts, Exams of Accounting

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ACCT 4100 Exam 1 Questions With Correct

Answers

strategic triangle - VERIFIED ANSWER✔✔-quality, cost, time quality - VERIFIED ANSWER✔✔-total experience of a customer with a product; physical characteristics (such as its features), reliability of performance of these features, post-sales service (and the performance level at which these services are performed by an org) cost - VERIFIED ANSWER✔✔-cost from supplier through disposition by customer; includes production costs from suppliers...through after sales support, and customer costs (what it takes to maintain and dispose of product) time - VERIFIED ANSWER✔✔-available when a customer needs it; to market for new products/services; to complete production cycle; to flow through distribution chain balanced scorecard perspectives - VERIFIED ANSWER✔✔-learning and growth, business process, customer, financial financial perspective - VERIFIED ANSWER✔✔-contemplates familiar measures such as: operating income, return on assets, return on equity, return on capital employed, economic value, etc.; "to succeed financially, how should we appear to our shareholders?"; lag indicator customer perspective - VERIFIED ANSWER✔✔-measures: customer satisfaction, customer retention, market share in target segments; "to achieve our vision, how should we appear to our customers?"; lead indicator business process perspective - VERIFIED ANSWER✔✔-measures: cost, throughput, quality; "to satisfy our shareholders and customers, what business processes must we excel at?"; lead indicator learning and growth perspective - VERIFIED ANSWER✔✔-focuses on the improvements made with regards to employee skills; considers: employee satisfaction, employee retention, skill sets; "to achieve our vision, how will we sustain our ability to change and improve?"; lead indicator

management accounting - VERIFIED ANSWER✔✔-a system of measuring and providing operational and financial information that guides managerial action, motivates behaviors, and supports and creates the cultural values necessary to achieve an organization's strategic objectives; has 3 attributes (technical, behavioral, cultural) strategy - VERIFIED ANSWER✔✔-the way a firm positions and distinguishes itself from its competitors positioning - VERIFIED ANSWER✔✔-the selection of target customers or markets decision relevance question - VERIFIED ANSWER✔✔-How does this management accounting method, measure or information help to manage cost, quality, and time? process understanding questions - VERIFIED ANSWER✔✔--What causes or drives costs to be incurred? -What causes defects? How can sources of defects be eliminated? -What actions or decisions cause budget variances? -Why is there unused capacity? What can be done to reduce this cost? -What actions increase time to market? behavioral questions - VERIFIED ANSWER✔✔--Do methods for measuring cost of quality help focus attention on quality? -Does rewarding employees for purchasing at the lowest cost motivate them to purchase poor quality materials? -How does budget achievement impact aspiration levels and future budget achievement? -How will the use of activity-based costing impact the cost reduction and quality improvement attitudes of employees? cultural questions - VERIFIED ANSWER✔✔--Are cost allocations using "ability to pay" fair? -Does the term "nonvalue-added activity" used in activity-based costing violate beliefs of workers about the importance of work? -Are methods that create pressure to meet budgets ethical? -How would the use of life-cycle cost impact the interests of industries that produce toxic waste?

belief systems - VERIFIED ANSWER✔✔-What: Explicit set of beliefs that define basic values, purpose and direction Why: To provide momentum and guidance to opportunity-seeking behaviors How: Mission statements; vision statements; credos; statements of purpose When: Opportunities expand dramatically; top managers desire to change strategic direction and to energize the workforce Who: Senior managers write substantive drafts; staff groups facilitate communication, feedback, and awareness Concise, value-laden, inspirational Can be thought of as the yang to the yin of boundary systems boundary systems - VERIFIED ANSWER✔✔-What: Formally stated rules, limits and proscriptions tied to defined sanctions and credible threat of punishment Why: To allow individual creativity within defined limits of freedom How: Codes of business conduct, asset acquisition systems, operational guidelines and strategic planning systems When: When reputation costs are high and when excessive search and experimentation risk dissipate the resources of the firm Who: Senior managers formulate with the technical assistance of staff experts Example: Our syllabus "Power of negative thinking" -- stated in negative terms or as minimum standards Especially critical in businesses where reputation built on trust is a key competitive asset Are an org's brakes: fastest companies need the best brakes diagnostic systems - VERIFIED ANSWER✔✔-What: Feedback systems that monitor organizational outcomes and correct deviations from preset standards of performance (e.g., profit plans and budgets, goals and objectives) Why: To allow effective resource allocation; define goals; provide motivation; establish guidelines for corrective action, allow ex post evaluation, and free scarce management attention How: Set standards, measure outputs, link incentives to goal achievement When: When performance standards can be preset and outputs can be measured; feedback information can be used to correct or influence deviations from standard; process or output variable is a critical performance variable

Who: Senior managers set goals and review performance; staff collect data and prepare reports One of main purposes is to eliminate manager's burden of constant monitoring interactive systems - VERIFIED ANSWER✔✔-What: Control systems that managers use to involve themselves regularly and personally in the decision activities of subordinates (e.g., profit planning, intelligence systems) Why: To focus organizational attention on strategic uncertainties and provoke the emergence of new initiatives and strategies How: Ensure data becomes an important and recurring agenda item and is the focus of regular attention by managers; participate in face-to-face meetings; continually challenge and debate data, assumptions and action plans When: Strategic uncertainties require search for disruptive change and opportunities Who: Senior managers actively use the system and assign subjective effort-based rewards Track the uncertainties that keep senior managers awake at night prevention costs - VERIFIED ANSWER✔✔-costs incurred to eliminate potential causes of adverse environmental impacts; cost of compliance

• redesigning products and processes
• using non-hazardous materials
• payment for studies
• training employees
• maintenance of machinery
• design of products to minimize leakage/waste assessment costs - VERIFIED ANSWER✔✔-costs incurred to measure and monitor potential sources of environmental damage; appraisal; cost of compliance
• filing EPA reports
• environmental audits
• training employees
• monitoring waste emissions
• monitoring costs of chemical processes

cultural attributes (environmental costs) - VERIFIED ANSWER✔✔-- organization shares society's value of protecting environment

• changes management's mindset away from compliance and towards strategic opportunity
• frames environmental issues so they are a part of normal decision making aggregation - VERIFIED ANSWER✔✔-environmental costs "buried" in accounting records environmental cost report - VERIFIED ANSWER✔✔-focusing attention: 4 evaluation processes:

1. Provide transparency for interactions and driving forces of environmental activities
2. Provide consistent measure of environmental performance that will allow trends to be determined
3. Enhance decision-making ability based on environmental info generated
4. Allow stakeholder participation in discussions about environmental performance target costing - VERIFIED ANSWER✔✔-the allowable amount of costs that can be incurred on a product and still earn the required profit from that product

• price-led
• customer-focused
• design centered
• cross functional assumes that prices are market driven an allowable cost considered throughout the product-development cycle Especially effective for companies with extensive supply chains that face globalization in price-aggressive marketplaces target cost - VERIFIED ANSWER✔✔-= market price - desired profit target costing key principles - VERIFIED ANSWER✔✔-1. price-led costing

2. customer focus
3. focus on design of products and processes

4. cross-functional teams
5. life-cycle cost reduction
6. value-chain involvement steps for target costing - VERIFIED ANSWER✔✔-1. Define the new product
7. Establish a target selling price
8. Calculate the target cost
9. Break down target cost by component
10. Design costs out union plants - VERIFIED ANSWER✔✔-- located in relatively low cost areas

• wage rates low
• transportation costs low
• less flexible, so changing over to new products is expensive
• better suited for large batch sizes and long production runs nonunion plants - VERIFIED ANSWER✔✔-- relatively high labor costs
• higher transportation costs
• offer flexibility --> work rules less restrictive, so plants can adapt to new products and production processes more easily
• can work overtime and add/reduce production workers more easily than the unionized plants --> allows greater flexibility in production schedule
• changing over to new products at these plants is less expensive than at the union plants
• relatively low volumes with variable demand --> initial plans were to produce at this plant co-packers - VERIFIED ANSWER✔✔-- independent vendors to whom production is outsourced
• product team requested a bid from them Stage Gate - VERIFIED ANSWER✔✔-- process for product development from a 3rd party

• consistent with the company's globalization strategy, the decisive factor that brought the plant to the U.S. was the desire to be close to the major market for sports utility vehicles
• Mercedes team members used various indexes to help them determine critical performance, design, and cost relationships for the AAV project realization phase - VERIFIED ANSWER✔✔-- regular customer clinics were held to view the prototype and to explain the new vehicle concept
• clinics produced important info about how the proposed vehicle would be received by potential customers and the press
• customers asked to rank importance of characteristics like safety, comfort, economy, and training --> engineers organized in function groups designed systems to deliver these essential characteristics
• vehicle remained alive because of changing dynamics projection phase - VERIFIED ANSWER✔✔-- project was monitored by annual updates of the NPV analysis
• accounting system served as a control mechanism to ensure actual production costs conformed to target (or standard) costs target cost index - VERIFIED ANSWER✔✔-= importance index / target cost percentage by function group
• indexes less than 1 could indicate a cost in excess of the perceived value of the function group --> opportunities for cost reduction, consistent with customer demands, count be identified and managed during the early stages of product development