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29) Customer relationship management initiatives use technology to coordinate all customer-facing
activities (such as marketing, sales calls, distribution, and after-sales support) and the design and
production activities necessary to get products to customers.
30) The supply chain describes the flow of goods, services, and information from the initial sources of
materials and services to the delivery of products to consumers.
31) The supply chain always occurs within a single organization.
32) Distribution refers to promoting and selling products or services to customers or prospective
customers.
33) The design of products, services, and processes component of the supply chain refers to the detailed
planning, engineering, and testing of products and processes.
34) Management accountants might provide information on decisions on whether to buy a product from
outside or manufacture it in-house.
35) The parts of the value chain associated with producing and delivering a product or service–
production and distribution–are referred to as the supply chain.
36) Value chain refers to its value to the employee.
37) Managers track the costs incurred in each value-chain category is to reduce costs and to improve
efficiency.
38) Competitive information serves as a benchmark that managers use to continuously improve their
operations.
39) Increased global competition is placing pressure on companies to reduce costs.
40) The increasing pace of technological information has resulted in longer product lifecycles.
41) Managers rely on management accounting information to evaluate alternative investment and R&D
decisions.
42) Classify each cost item into one of the business functions of the value chain, either (1) R&D, (2) design,
(3) production, (4) marketing, (5) distribution, or (6) customer service.
Item:
a. cost of samples mailed to promote sales of a new product
b. labor cost of workers in the manufacturing plant
c. bonus paid to a person with a 90% satisfaction rating in handling customers with complaints
d. transportation costs for shipping products to retail outlets
43) Classify each cost item of Ripon Printers given below into one of the business functions of the value
chain, either (1) R&D, (2) design of products and processes, (3) production, (4) marketing (including
sales), (5) distribution, or (6) customer service.
Item:
a. cost of customer order forms
b. cost of paper used in manufacture of books
c. cost of paper used in packing cartons to ship books
d. cost of paper used in display at national trade show
e. depreciation of trucks used to transport books to college bookstores
f. cost of the wood used to manufacture paper
g. salary of the scientists attempting to find another source of printing ink
h. cost of designing the book size so that a standard-sized box is filled to capacity
44) Describe the value chain and how it can help organizations become more effective.
45) Value chain and classification of costs, car company.
General Motors incurs the following costs:
a. Electricity costs for the plant assembling the Chevrolet Camaro
b. Transportation costs for shipping the Camaro to dealers
c. Payment to Shelby Designs for the design of the Camaro.
d. Salary of an engineer working on the next generation of Camaros
e. Cost of GM employees' visit to an auto show to demonstrate the Camaro
f. Testing the Camaro at the GM track
g. Payment to television network for running Camaro advertisements
h. Cost of brake pads purchased from outside supplier to be installed on the Camaro
Required:
Classify each of the cost items (a-h) into one of the business functions of the value chain.
1) Research and development
2) Design of products and processes
3) Production
4) Marketing and sales
5) Distribution
6) Customer service
Objective 1.4
1) Place the five steps in the decision-making process in the correct order:
A = Obtain information
B = Make decisions by choosing among alternatives
C = Identify the problem and uncertainties
D = Implement the decision, evaluate performance, and learn
E = Make predictions about the future
A) C D B E A
B) E D A B C
C) C A E B D
D) A E B D C
2) Which of the following is true of planning in decision making?
A) It helps an organization to select goals and strategies.
B) It improves the quality of products.
C) It helps in evaluating performance.
D) It helps in the analysis of actual performance.
3) The most important planning tool is a ________.
A) performance evaluation report
B) fishbone diagram
C) control chart
D) budget
4) A report showing the actual financial results for a period compared to the budgeted financial results
for that same period would most likely be called a ________.
A) strategic plan
B) management forecast
C) performance report
D) revised plan
5) A budget ________.
A) is the qualitative expression of a proposed plan of action by management
B) is an aid to coordinating what needs to be done to execute a plan
C) helps in identifying problems and uncertainties
D) promotes production automation
6) Which of the following is true of planning?
A) It makes predictions about the future.
B) It assumes the functional hierarchy of any business is linear.
C) It improves the quality of products.
D) It evaluates customer feedback
7) A budget serves as much as a control tool as a planning tool because ________.
A) it aids in the coordination and communication among various business functions
B) it helps to evaluate customer needs and feedback
C) it is a benchmark against which actual performance can be compared
D) it helps.to make predictions about the future
8) Which of the following is an example of an extrinsic reward?
A) receiving a high rating on customer service
B) appreciation mail from a customer
C) promotions based on performance
D) verbal appreciation from CEO
9) Which of the following is an example of an intrinsic reward?
A) bonuses paid to employees
B) recognition of job well done
C) promotions based on performance
D) salaries paid to employees
10) Linking rewards to performance ________.
A) helps to motivate managers
B) allows companies to charge premium prices
C) should only be based on financial information
D) enhances agency costs
11) Control measures should ________.
A) be set and not changed until the next budget cycle
B) be set by excluding nonfinancial information
C) be kept confidential from employees so that competitors don't have an opportunity to gain a
competitive advantage
D) be linked by feedback to help future planning
12) A well-conceived plan allows managers the ability to ________.
A) not make decisions again until the next planning session
B) keep lower-level managers from implementing change
C) underestimate costs so that actual operating results will be favorable when comparisons are made
D) take advantage of unforeseen opportunities
13) Which of the following statements is true of performance reports?
A) The performance report shows actual performance as compared to the budget.
B) The performance report depicts the performance of a firm's competitors.
C) The performance report compares only the budgeted performance over the years.
D) The performance report contains no actual results due to confidentiality.
14) Management accounting is considered most likely to be successful when it ________.
A) helps creditors evaluate the company's performance
B) helps investors improve their decisions
C) is timely
D) is relevant and reported annually
15) The last step in the decision-making process is to make decisions by choosing among alternatives.
16) One of the steps in planning is evaluating the performance and taking corrective measures.
17) A budget helps to control activities by adhering to the prescribed plan.
18) To take advantage of changing market opportunities, the annual budget should be strictly enforced.
19) A budget is a qualitative expression of a plan.
20) The process of preparing a budget forces coordination and communication throughout the company.
21) Linking rewards to performance helps in good management performance.
22) Control comprises taking actions that implement the planning decisions, evaluating past
performance, and providing feedback and learning to help future decision making.
23) A budget can only be used as a planning tool.
24) Gathering information before making a decision leads to a wastage of time and is not helpful.
25) Evaluating a performance helps in the future decision-making process.
26) Bonuses given to employees based on performance is an example of extrinsic reward.
27) A budget is a benchmark against which actual performance can be compared.
28) A performance report compares actual performance to the amount budgeted.
29) Management accounting is playing an increasingly important role by helping managers develop and
implement strategy.
30) In order, list the five steps in the decision-making process.
31) For each type of report listed below, identify one planning decision and one controlling decision for
which the information would be helpful. Assume you are a Walgreen Company store.
Item:
a. annual financial statements for the past three years
b. report detailing sales by department by each hour of the day for the past week
c. special study regarding increased road traffic due to the construction of a new shopping mall at a
near-by intersection
32) Briefly explain the planning and control activities in management accounting. How are these two
activities linked to each other?
33) Explain how a budget can help management implement strategy.
34) What is planning in decision making? Explain how budget helps in planning.
35) Complete a performance report for the month of May, 2014, for Times Corp, a regional newspaper
showing four columns: 1) Actual Result; 2) Budgeted Amount; 3) Difference: Actual Result minus
Budgeted Amount; 4) Difference as a Percentage of Budgeted Amount, given the following data:
Actual pages sold
550
Budgeted advertising pages
500
Actual Advertising revenue
$4,200,000
Budgeted Advertising revenue
$4,000,000
Does the report indicate any cause for managerial investigation?
