1. The value chain comprises activities from research and development through the
production process, but does not include activities related to the distribution of products or
services.
2. Administrative functions are not included as part of the value chain because they are
implicitly included in every business function.
3. Under the value chain concept, instead of perceiving whether individual activities in the
chain add value, customers only consider the overall utility of the goods or services they
purchase.
4. A
cost driver
is a factor that causes costs.
5. A cost can be considered a differential cost for one particular course of action but not for
another course of action.
6. A responsibility center can be a department, division, or segment, but not a subsidiary of
the parent company.
7. It is important that the manager assigned to lead a responsibility center be held
accountable for its operations.
8. Budgeting is primarily used to determine year-end bonuses based on managerial and
organizational performance.
9. Managers are usually responsible for the revenues needed to achieve the targets set
during the budgeting process, but not the resources consumed to achieve those targets.
10. Cost data can be used for one managerial decision but not for another managerial
decision.
11. Financial accounting information is designed for decision-makers who are directly
involved in the daily management of the firm.
12. It is more important for financial accounting information to be comparable between firms
than to be useful for managerial decision-making.
13. Cost accounting information developed for managers to use in making decisions must
comply with generally accepted accounting principles (GAAP) and international financial reporting
standards (IFRS).
14. Cost accounting information can be used by managers to defraud customers, creditors,
and owners.
15. Benchmarking is a continuous process of measuring a company’s products, services, or
activities against competitors’ performance.
16. Activity-based costing (ABC) is a management tool that focuses on the continuous
improvement of all dimensions of a business.
17. Customer satisfaction is an example of a non-financial performance measure.
18. Managers face ethical situations on a daily basis, while accountants face them
infrequently.
19. A person who makes unethical decisions in their personal life is likely to make unethical
decisions in their professional life.
20. Ethical behavior depends more on a firm’s code of conduct than the individual’s personal
beliefs.
21. The Value chain is comprised of the activities that take place during the production
process.
22. Cost accounting plays a significant role in management decision making.
23. Cost accounting provides information only for cost accounting purposes.
24. Cost accounting is broader in scope than financial accounting.
25. Financial accounting receives information only from cost accounting activity.
26. Financial accounting provides financial and nonfinancial information that helps managers
in the decision making process.
27. A value chain consists of the major subassemblies that add value to a product.
28. The lean thinking model focuses on reducing defects to as close to zero as possible.
29. The set of activities that transforms raw resources into the goods and services of an
organization is called:
30. Which of the following activities would not be considered a value-added activity?
31. Which of the following statements is false?
32. Managers do not make decisions about future events based on:
33. Which of the following is a nonvalue-added activity?
34. (CMA adapted) An accounting system that collects financial and operating data on the
basis of the underlying nature and extent of cost drivers is
35. (CMA adapted) Cost drivers are
36. During 2013, the JKL Restaurant had sales revenues and food costs of $800,000 and
$600,000, respectively. During 2014, JKL plans to introduce a new menu item that is expected to
increase sales revenues by $100,000 and food costs by $40,000. Assuming no changes are
expected for the other food items, operating profits for 2013 are expected to increase by
37. (CMA adapted) The process of creating a formal plan and translating goals into a
quantitative format is referred to as