Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
13) Which of the following best describes the effect of uncertainty?
A) The higher the level of uncertainty about the relationship between resources used and outputs, the less
likely a cause-and-effect relationship will exist.
B) The higher the level of uncertainty about the relationship between resources used and outputs, the
more likely a cause-and-effect relationship will exist.
C) The higher the level of uncertainty about the relationship between resources used and outputs, the
more likely the cost will classified as a discretionary cost.
D) The higher the level of uncertainty about the relationship between resources used and outputs, the less
likely the cost will classified as a discretionary cost.
E) The higher the level of uncertainty about the relationship between resources used and outputs, the less
likely a cause-and-effect relationship will exist, and the more likely the cost will classified as a
discretionary cost.
14) Unused capacity is difficult to determine for
A) engineered costs.
B) discretionary costs.
C) both engineered and discretionary costs.
D) costs with an observable cause and effect relationship.
E) costs that do not deviate from expected amounts.
15) The lower the inputs for a given set of outputs or the higher the outputs for a given set of inputs, the
higher the level of
A) standard costs.
B) sales.
C) productivity.
D) labour costs.
E) labour costs and productivity.
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
16) Partial productivity multiplied by the quantity of input used results in
A) expected production.
B) budgeted output.
C) quantity of output produced.
D) a ratio.
E) productivity.
17) ________ measures the relationship between actual inputs used and actual outputs achieved.
A) Total factor productivity
B) Partial productivity
C) Productivity
D) Product yield variance
E) Labour yield
18) The ratio of the quantity of output produced divided by the quantity of a single input used, is called
A) total factor productivity.
B) partial productivity.
C) productivity.
D) product yield variance.
E) productivity variance.
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
19) Melik Company provided the following information:
Budgeted input
12,000 kilograms
Actual input
15,000 litres
Budgeted production
5,000 units
Actual production
4,750 units
What is the partial productivity ratio?
A) 0.32 units per kilogram
B) 0.42 units per kilogram
C) 2.40 units per kilogram
D) 3.16 units per kilogram
E) 0.80 units per kilogram
20) Which of the following statements is true concerning productivity?
A) The lower the partial productivity ratio, the greater the productivity.
B) Productivity has increased when the partial productivity is high.
C) Prices of inputs are incorporated in the partial productivity ratio.
D) The partial productivity ratio measures the number of outputs produced per multiple input.
E) The partial productivity ratio measures the amount of a single output produced with multiple inputs.
21) What is the direct manufacturing labour partial productivity, assuming 20,000 widgets were
produced during the year and 80,000 direct manufacturing labour-hours were used?
A) 0.25 unit per direct manufacturing labour-hour
B) 0.50 unit per direct manufacturing labour-hour
C) 0.75 unit per direct manufacturing labour-hour
D) 4.00 unit per direct manufacturing labour-hour
E) 1.25 unit per direct manufacturing labour-hour
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
22) What is the direct manufacturing labour partial productivity, assuming 10,000 units were produced
during the year and 40,000 direct manufacturing labour-hours were used?
A) 0.25 unit per direct manufacturing labour-hour
B) 0.50 unit per direct manufacturing labour-hour
C) 0.75 unit per direct manufacturing labour-hour
D) 4.00 unit per direct manufacturing labour-hour
E) 1.25 unit per direct manufacturing labour-hour
23) Which of the following statements is true concerning productivity measures?
A) Both the partial productivity and total factor productivity measures have the same weaknesses, but
each has different strengths as a measure.
B) Both the partial productivity and total factor productivity measures have the same strengths, but each
has different weaknesses as a measure.
C) Both the partial productivity and total factor productivity measures have the same strengths, and the
same weaknesses as a measure.
D) The weaknesses of the partial productivity measure are the strengths of the total factor productivity
measure.
E) The strengths and weakness in the measurements of the partial productivity measure are the strengths
of the total factor productivity measures are completely unrelated to each other.
24) Which of the following would result in an increase in total factor productivity, assuming all other
variables are held constant?
A) The quantity of outputs increases.
B) The company uses more total inputs.
C) The company uses lower quality inputs.
D) Current technology becomes obsolete.
E) Quantity of inputs increases and costs of inputs stays the same.
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
25) Which of the following is a major advantage of total factor productivity?
A) It measures the combined productivity of all inputs.
B) The control operations personnel have over inputs.
C) The control operations personnel have over outputs.
D) The marketing mix determined by management.
E) It is easy for operations personnel to understand.
26) ________ is the ratio of the quantity of output produced to the costs of all inputs used, where the
inputs are combined on the basis of current period prices.
A) Total factor productivity
B) Partial productivity
C) Productivity
D) Product yield variance
E) Manufacturing conversion
27) A disadvantage of total factor productivity over partial productivity is that
A) it focuses attention on a single input.
B) it compares multiple physical inputs with outputs.
C) the input is a fixed amount.
D) operations personnel find financial measures more difficult to understand than physical measures.
E) cause and effect relationships are more easily identified.
28) Which of the following statements about productivity measures is true?
A) They may only be stated in terms of dollars.
B) Total factor productivity explicitly considers gains from using fewer inputs, not from substituting
inputs.
C) Partial productivity measures allow managers to evaluate the effect of input substitutions on overall
productivity.
D) It is important to use the results as a starting point for analysis.
E) The productivity measure may not be made for companies with multiple products.
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
29) The average number of student credit hours taught per faculty member is an example of
A) an expected performance measure.
B) a budgeted productivity measure.
C) a standard productivity measure.
D) a partial productivity measure.
E) a total factor productivity measure.
30) Frazier Company provided the following information:
Budgeted input
19,500 litres
Actual input
17,900 litres
Budgeted production
20,000 units
Actual production
19,000 units
What is the partial productivity ratio?
A) 0.94 unit per litre
B) 1.03 units per litre
C) 1.06 units per litre
D) 0.98 units per litre
E) 1.09 units per litre
31) Germaine Company provided the following information.
Budgeted input
9,750 litres
Actual input
8,950 litres
Budgeted production
10,000 units
Actual production
9,500 units
What is the partial productivity ratio?
A) 0.97 unit per litre
B) 1.02 units per litre
C) 1.06 units per litre
D) 1.12 units per litre
E) 1.71 units per litre
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
32) Vinetta Ltd. provided the following information:
Budgeted input
18,000 litres
Actual input
17,200 litres
Budgeted production
32,000 units
Actual production
30,000 units
What is the partial productivity ratio?
A) 1.78 unit per litre
B) 1.74 units per litre
C) 0.57 units per litre
D) 0.56 units per litre
E) 1.67 units per litre
33) Justine Ltd. provided the following information.
Budgeted input
173,600 kilograms
Actual input
180,000 kilograms
Budgeted production
125,000 units
Actual production
135,000 units
What is the partial productivity ratio?
A) 0.72 unit per kilogram
B) 0.75 units per kilogram
C) 1.34 units per kilogram
D) 1.12 units per kilogram
E) 0.78 units per kilogram
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
34) Power Company has been unhappy with the financial accounting variances that its cost accounting
system has been producing, because its managers believe that there is more to evaluating an operation
than just examining accounting numbers. Therefore, it has started gathering data to assist in the
examination of nonfinancial results of operations. The following information relates to the manufacture
of remote control units for televisions, radios, and stereo components.
Year 1 Year 2
Remote control units produced and sold 40,000 50,000
Direct manufacture labour-hours 6,000 6,600
Direct materials used (sets) 40,300 50,250
Direct manufacture cost per hour $18 $20
Direct materials cost per set $31 $32
Required:
a. What is the partial productivity of direct materials for each year?
b. What is the partial productivity of direct manufacturing labour for each year?
c. Did each area improve between year 1 and year 2? Explain.
d. What will be the projected direct material and labour needs for year 3 if remote control units increase
by 6,000 units, assuming Power Company applies the constant returns to scale technology?
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
35) Electronics Inc. has been unhappy with the financial accounting variances that its cost accounting
system has been producing, because its managers believe that there is more to evaluating an operation
than just examining accounting numbers. Therefore, it has started gathering data to assist in the
examination of nonfinancial results of operations. The following information relates to the manufacturing
of remote control units for televisions, radios, and stereo components.
Year 1 Year 2
Remote control units produced and sold 20,000 24,000
Direct manufacture labour-hours 3,000 3,200
Direct materials used (sets) 20,200 26,200
Direct manufacture cost per hour $36 $40
Direct materials cost per set $62 $64
Required:
a. What is the partial productivity of direct materials for each year?
b. What is the partial productivity of direct manufacturing labour for each year?
c. Did each area improve between year 1 and year 2? Explain.
d. What will be the projected direct material and labour needs for year 3 if remote control units increase
by 3,000 units, assuming Electronics, Inc. applies the constant returns to scale technology?
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
36) Grader Company manufactures road graders. Because its managers all have engineering
backgrounds, it prefers nonfinancial information for its decision-making models. Therefore, it requires
that the accountants gather data to assist in the examination of nonfinancial results of operations. The
following information relates to the manufacture of a mobile paver.
Year 1 Year 2
Units produced and sold 3,400 2,800
Direct manufacture labour-hours 68,000 57,600
Direct materials used (tons) 14,500 12,200
Direct manufacture cost per hour $21 $22
Direct materials cost per tonne $431 $443
Required:
a. What is the partial productivity for direct materials for each year?
b. What is the partial productivity for direct manufacturing labour for each year?
c. What is the total factor productivity for each year?
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
37) Lake Company manufactures small boats. Because its managers all have engineering backgrounds,
they prefer nonfinancial information for their decision–making models. Therefore, they require the
accountants gather data to assist in the examination of nonfinancial results of operations. The following
information relates to the manufacture of a small boat.
Year 1 Year 2
Units produced and sold 1,700 1,500
Direct manufacture labour-hours 35,000 32,000
Direct materials used (tons) 7,000 6,400
Direct manufacture cost per hour $42 $44
Direct materials cost per tonne $700 $720
Required:
a. What is the partial productivity for direct materials for each year?
b. What is the partial productivity for direct manufacturing labour for each year?
c. What is the total factor productivity for each year?
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
38) Ralph Company has been very aggressive in developing various types of financial and nonfinancial
measurement schemes to help with the evaluation of its manufacturing processes. It appears that some of
the managers are suboptimizing in that their decision processes are geared solely for their department’s
benefit, sometimes to the detriment of the organization as a whole.
Required:
What changes in the evaluation system could the company implement to help minimize the
suboptimization of the managers’ decision-making process?
39) Total factor productivity (TFP) is easy to compute for a single-product company. When dealing with a
multiproduct company, one of two adjustments must be made. What are these potential adjustments?
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
40) Fairytale Weddings manufactures wedding dresses. The following information relates to the
manufacture of gowns in its Perth plant:
Year 1 Year 2
Units produced and sold 43,000 52,600
Direct manufacture labour-hours 22,000 26,000
Direct materials used (metres) 130,000 152,000
Direct manufacture labour cost per hour $16 $17
Direct materials cost per metre $10 $11
Required:
Prepare an analysis of change in annual costs from year 1 to year 2 including direct materials, direct
manufacturing labour, and total inputs.
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
41) Define engineered and discretionary costs and give two examples of each.
42) Can a company identify unused capacity and, if so, how can unused capacity be managed?
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis
43) Ranger Electronics Ltd. manufactures a variety of high quality electronic components. Data from the
last three months are presented below:
April
May
June
0.85
0.86
0.87
80
75
72
2.00%
1.95%
1.92%
98.0%
98.3%
98.0%
6.90
6.85
6.80
2
1
1
12.0
11.5
11.25
6
5
4
12.0
11.8
11.5
You are the new assistant controller for Ranger and the controller has asked you to review the
performance over the last 3 months and write a summary analysis with your recommendations for follow
up or further monitoring. In addition, the controller notes that the company, although it has many
detailed performance measures, is considering implementing a balanced scorecard and asks you to
identify the measures you think would be most appropriate to include in the balanced scorecard.
Required:
Evaluate the performance of Ranger Electronics over the 3 month period.
Cost Accounting: A Managerial Emphasis, 6e
Chapter 13 – Strategy, Balanced Scorecard, and Profitability Analysis