Exam 1: The Changing Role of Managerial Accounting in a Dynamic Business Environment

Which of the following statements represents a similarity between financial and managerial accounting?

Unused or excess capacity is a key component of contemporary management accounting. Required: Define the term "excess capacity" and explain how it would relate to a coffee shop.

Which of the following characteristic(s) relate(s) more to managerial accounting than to financial accounting?

The capacity concept that allows for normal occurrences such as machine downtime and employee fatigue is known as:

In order for a company to achieve a sustainable competitive advantage, it must:

The nature of managerial accounting reports is to focus on the enterprise in its entirety.

Line positions are indirectly involved in operational activities.

Which of the following is correct regarding the changing role of managerial accounting?

Consider the descriptors that follow. 1. Is heavily involved with the recordkeeping and reporting of assets, liabilities, and stockholders' equity. 2. Focuses on planning, decision making, directing, and control. 3. Is heavily regulated. 4. A field that is becoming more "cross-functional" in nature. 5. Much of the field is based on costs and benefits. 6. Is involved almost exclusively with past transactions and events. 7. Much of the information provided is directed toward stockholders, financial analysts, creditors, and other external parties. 8. Tends to focus more on subunits within an entity rather than the organization as a whole. 9. May become involved with measures of customer satisfaction, and the amount of actual cost incurred vs. budgeted targets.

The process of managing the various activities in the value chain, along with the associated costs, is commonly known as:

The process of encouraging and authorizing workers to take appropriate initiatives to improve the overall firm is commonly known as:

Financial accounting focuses primarily on reporting:

Which of the following is not an element of competency?

Many professions have adopted a series of ethical standards to provide guidance for their memberships. The Institute of Management Accountants (IMA), for example, has published standards that focus on competence, confidentiality, integrity, and credibility. In light of these standards, consider the three cases that follow. Case A-Leston Corporation has experienced serious financial difficulties in recent years. John Young, the company's chief financial officer, has just learned that a major competitor was likely to file for bankruptcy; however, he failed to disclose this information at a board meeting held later that day when a plant closure decision was being discussed. The board evaluated several proposals during the session that focused on improving Leston's financial position. Case B-QBX Company manufactures fertilizer from various raw materials, including a raw material know as Felstar. Paul Kelly, the firm's purchasing manager, purposely acquired a lower grade of Felstar than normal because of a very attractive price. The lower-grade product resulted in increased usage during the manufacturing process but had no effect on the fertilizer's overall quality. An end-of-period report showed that QBX profited from Kelly's actions, with the overall savings in purchase price more than offsetting the cost of added consumption. Case C-Central Distributing has a participative budgeting process, allowing employees to have a say in projected sales targets for the upcoming period. These targets are reflected in a series of performance reports that compare actual sales achieved against targeted amounts. Hillary Baxter submitted very low sales targets because, as she confided in a colleague, "I always want to look good in terms of meeting targets, even if anticipated sales and closures don't materialize." Required: Evaluate the three cases and determine the ethical issues, if any, which are involved. Cite the IMA's standards if appropriate.

Cost management systems tend to focus on an organization's:

Which of the following employees at Fresh Brew Co. would likely be considered as holding a staff position?

Which of the following is not an action performed in combination with information to pursue the goals of managerial accounting?

Managerial accounting:

All of the following are common reasons for forming cross-functional teams except:

The CMA is a professional certification that managerial accountants can earn to validate their skills and the specialized knowledge that they possess.