Chapter 1: Introduction to Cost Management
89. All of the following would be considered staff functions EXCEPT the
a. vice president of finance.
b. vice president of corporate planning.
c. vice president of marketing.
d. vice president of research and development.
90. Which of the following positions would most likely be a staff manager?
a. manager of a Sears store
b. president
c. manager of a clothing division
d. controller
91. Which of the following would be considered a line function?
a. production
b. maintenance
c. public relations
d. administrative services
92. Which of the following job positions is a staff position?
a. controller
b. production vice president
c. production supervisor
d. assembly foreman
93. Accounting activities within an organization are usually under the overall supervision of the
a. Certified Public Accountant.
b. controller.
c. Chartered Accountant.
d. treasurer.
Chapter 1: Introduction to Cost Management
94. The chief accounting officer of an organization is the
a. vice president of finance.
b. internal auditor.
c. treasurer.
d. controller.
95. Which of the following is the officer responsible for money management and serves chiefly as the custodian of the
organization‘s funds?
a. Certified Public Accountant
b. controller
c. Chartered Accountant
d. treasurer
96. Which of the following duties is usually assigned to the controller?
a. receiving, maintaining custody of, and disbursing monies and securities
b. directing the granting of credit to clients
c. investing the organization‘s funds
d. tax planning
97. Currently, the activity found LEAST often within the controller‘s department is
a. updating the general ledger.
b. budget preparation.
c. maintaining accounts receivable records.
d. establishing and maintaining a market for the organization’s debt and equity securities.
98. The setting of objectives and the identification of methods to achieve those objectives is called
a. planning.
b. controlling.
c. performance evaluation.
d. decision making.
Chapter 1: Introduction to Cost Management
99. Analyzing cost overruns to determine their cause is an example of
a. planning.
b. control.
c. decision making.
d. both a and c.
100. Monitoring the number of defects produced is an example of the management function of
a. planning.
b. control.
c. decision making.
d. both a and c.
101. Comparing actual quality costs with planned quality costs is an example of
a. planning.
b. controlling.
c. performance evaluation.
d. both b and c.
102. Performance reports are accounting reports that compare
a. planned data with actual data.
b. audited data with actual data.
c. managers’ bonuses with performance ratings by supervisors.
d. planned data with industry standards.
103. Setting the company’s profit targets for the upcoming year is an example of the management function of
a. planning.
b. control.
c. variance analysis.
d. internal auditing.
Chapter 1: Introduction to Cost Management
104. Developing a company strategy for responding to anticipated new markets is an example of
a. planning.
b. control.
c. performance evaluation.
d. all of these.
105. The planning process includes
a. setting objectives.
b. identifying means of achieving the objectives.
c. making decisions.
d. all of these.
106. Investigating production variances and adjusting the production process is an example of
a. planning.
b. control.
c. internal auditing.
d. both a and c.
107. In a performance report, the
a. differences between actual costs and allowed costs are always undesirable.
b. expenditures of less than allowed amounts are undesirable.
c. expenditures of more than allowed amounts are not permitted to occur.
d. expenditures of less than allowed amounts are desirable.
108. Evaluating the performance of a segment of the company is an example of
a. planning.
b. control.
c. internal auditing.
d. both a and c.
Chapter 1: Introduction to Cost Management
109. The formulation of a program for the accomplishment of a specific purpose is referred to as
a. controlling.
b. motivating.
c. organizing.
d. planning.
110. The manager has to decide what tasks are needed and how they should be accomplished. This statement describes
a. the organization chart.
b. planning.
c. organizing.
d. none of these.
111. The monitoring of a plan‘s implementation is called
a. planning.
b. controlling.
c. decision making.
d. budgeting.
112. Inspecting units produced to determine if they meet specifications is an example of
a. planning.
b. control.
c. decision making.
d. both a and c.
113. Continuous improvement is
a. critical in a dynamic environment.
b. important to finding and maintaining a competitive advantage.
c. an effort to find ways to increase overall efficiency, improve quality, and reduce costs.
d. all of these.
Chapter 1: Introduction to Cost Management
114. Which of the following describes the managerial activity of comparing actual results with budgeted results?
a. control
b. continuous improvement
c. planning
d. decision making
115. Managers are considering outsourcing sub-components of production. Data is collected about the costs of making
the sub-component. Different bids are sought about the purchase of the sub-components. Which managerial activity
is applicable in this situation?
a. control
b. continuous improvement
c. planning
d. decision making
116. In a company, engineers have redesigned production processes lowering production costs, shortening production
cycle time, reducing waste and improving quality. Which type of managerial activity applies to this situation?
a. controlling
b. continuous improvement
c. planning
d. decision making
117. Determining the bid your company should submit on a construction contract is an example of
a. planning.
b. control.
c. decision making.
d. none of the above
118. Setting the selling price of a company‘s product is an example of
a. planning.
b. control.
c. decision making.
d. all of these.
Chapter 1: Introduction to Cost Management
119. Which of the following have been found to be TRUE?
a. Firms that emphasize ethics outperform firms that don’t emphasize ethics.
b. Those corporations that mention ethics in their management reports have lower than average performance.
c. Companies with a strong code of ethics and sense of integrity and honor will have trouble competing over the long
run.
d. All of these.
120. Principles of personal ethical behavior include
a. integrity.
b. respect for others.
c. fairness.
d. all of these.
121. The standards of ethical conduct for management accountants include
a. competence and performance.
b. integrity and respect for others.
c. confidentiality, confidence, integrity, and observance.
d. competence, confidentiality, integrity, and credibility.
122. Extending the close of the fiscal year beyond December 31 so that some sales of next year are included in the
current year would be a violation of which standard of ethical conduct for management accountants?
a. competence
b. confidentiality
c. conformance
d. all of these
123. When a management accountant attends training seminars on new FASB rules, which part of the IMA Code of
Conduct is being observed?
a. competence
b. confidentiality
c. integrity
d. credibility
Chapter 1: Introduction to Cost Management
124. Altering dates of shipping documents of next January’s sales to record them as sales in the current year would be a
violation of which standard of ethical conduct for management accountants?
a. competence
b. integrity
c. credibility
d. all of these
125. The acceptance of a savings bond from a supplier would be a violation of which standard of ethical conduct for
management accountants?
a. confidentiality
b. integrity
c. reliability
d. none of these
126. In resolving an ethical conflict, it is inappropriate to discuss the problem with the immediate supervisor because of a
violation of which standard of ethical conduct for management accountants?
a. competence
b. confidentiality
c. credibility
d. This action is not in violation of the code of conduct.
127. In resolving an ethical conflict, which of the following would NEVER be appropriate?
a. discussing the matter with the chief executive officer
b. discussing the matter with an external member of the board of directors
c. taking the matter to the press where there is no legal requirement
d. resigning from the position because of a conflict
128. Which of the following relates to the credibility section of the IMA Code of Conduct?
a. Prepare clear and complete reports.
b. Communicate professional limitations.
c. Avoid actual or apparent conflicts of interest.
d. Communicate information fairly and objectively.
Chapter 1: Introduction to Cost Management
129. Disclosing all information, unfavorable as well as favorable, that could influence an intended user’s understanding of
reports, would relate to what section of the IMA Code of Conduct?
a. competence
b. independence
c. integrity
d. credibility
130. Engaging in or supporting an activity that would discredit the profession would relate to which part of the IMA Code
of Conduct?
a. competence
b. independence
c. integrity
d. credibility
131. When a management accountant ignores data in favor of unsupported opinion, this action would speak most directly
to which part of the IMA Code of Conduct?
a. competence
b. confidentiality
c. independence
d. credibility
132. Disclosing company information (when not legally obligated to do so) would be a violation of which part of the IMA
Code of Conduct?
a. competence
b. confidentiality
c. independence
d. credibility
133. The Standards of Ethical Professional Practice of the Institute of Management Accountants addresses all of the
following EXCEPT
a. competence
b. confidentiality
c. strategic cost management
d. integrity
Chapter 1: Introduction to Cost Management
134. Persons in the United States who provide external auditing services are designated as
a. Certified Public Accountants.
b. Certified Financial Accountants.
c. Chartered Accountants.
d. Certified Management Accountants.
135. An accountant certified to possess the minimal professional qualifications for an external auditor is a
a. CPA
b. CMA
c. CIA
d. all of these
136. The IMA has a program to recognize professional competence and educational attainment in the field of
management accounting. The program leads to designation as a
a. Certified Management Accountant.
b. controller.
c. Chartered Accountant.
d. treasurer.
137. The certification sponsored by the Institute of Management Accountants that emphasizes economics, finance,
management, financial accounting and reporting, management reporting, and decision analysis is the
a. CPA
b. CMA
c. CIA
d. all of these
Chapter 1: Introduction to Cost Management
138. Explain the relationship between the Cost Management System and the Financial Accounting System.
139. Describe the two major subsystems of the Cost Management System and briefly summarize their importance.
140. Briefly discuss the relationship between cost accounting, management accounting, and cost management.
141. Identify and discuss the factors that are affecting the way cost accounting is practiced.
142. What is customer orientation? Why is it important in a global environment? What role does cost management play in
serving customers?
Chapter 1: Introduction to Cost Management
143. Discuss the advances of information technology and how these advances might affect the university education
supply chain?
144. Discuss four factors that are changing the way we manufacture.
145. Why has time become such an important factor in competition?
146. How has the nature of accounting systems shifted in response to technology?
147. What is the difference between a staff position and a line position?
148. Contrast the role of the financial vice president, the controller, and the treasurer.
149. Describe the connection between planning, controlling, and feedback.
Chapter 1: Introduction to Cost Management
150. Give some examples of reporting feedback that will assist in continuous improvement of a service industry company.
151. What is the role of the controller in an organization? Describe some of the activities over which he or she has
control.
152. You are a management accountant for the Eastern Division of Strong Enterprises. Your longtime friend, Alana
Rodriguez, is the Eastern Division manager. Alana was instrumental in helping you obtain your current position.
Because the manager’s annual bonus is based on the amount of profit the Eastern Division reports for the year,
Alana has asked you to “massage the numbers” to make the Eastern Division appear more profitable.
Considering the Standards of Ethical Conduct for Management Accountants, how would you respond to Alana
Rodriguez’ request?
153. Discuss how the goal of profit maximization is affected by ethical considerations. What incentives are there for
managers to manipulate accounting data in unethical ways in order to increase profits?
154. What can a company do to increase the likelihood of its employees being ethical in all their undertakings?
Chapter 1: Introduction to Cost Management
155. You are a management accountant for Savage Corporation. Gabe Hopen, the sales representative for one of Savage
suppliers, invited you to attend a professional sporting event. Because you are an avid sports fan, you accepted
Gabe’s invitation.
At the sporting event, Gabe begins talking about Savage’s upcoming contract renewals with suppliers. Because there
is intense competition and because it is the first bid he will submit to Savage Corporation, he asks you to review his
bid to make sure “it is good enough” before he submits it to the company. In addition, because you are
knowledgeable about costs, especially regarding this contract, he asks you to tell him if his bid is “in the ballpark” or
“needs improvement.” he indicates that if he wins the contract, you will be provided with season tickets for the rest
of the year.
Considering the Standards of Ethical Conduct for Management Accountants, how would you respond to Gabe’s
request?
156. Explain what is meant by confidentiality and why it is important.
157. Discuss the three forms of accounting certification. Which form of certification do you believe is best for
management accountants? Why?