Exam 1: Cost Management and Strategic Decision Making Evaluating Opportunities and Leading Change

The only primary processes in the value chain are research and development and design.

Match the following operations with appropriate elements of an organization's value chain. Value Chain Element -Development of new software applications at Oracle.

Which of the following would not be part of an organization's eight-step process for implementing change?

Refraining from disclosing confidential information acquired in the course of their work is an example of the ethical standard of competence for Management Accountants.

Match the following operations with appropriate elements of an organization's value chain. Value Chain Element -Crate and Barrel's replies to customers' questions on merchandise.

The use of Internet-based information and Web sites for solicitations is an example of the customer service part of the value chain.

The President of the company is considering adding sandwiches to the menu. Sales will be expected to increase by $60,000. The cost of sandwich supplies would be $30,000. Labor costs would increase 40% and other costs 10%. The current manager will continue to manage the operation. Required: (a) Prepare a quantitative analysis of the decision to add sandwiches to the menu. (b) What qualitative considerations should the company consider in this decision? C & P Frosties is a local ice cream shop. The company currently is showing an operating loss, as evidenced by the income statement below:

Strategic decision making is not applicable in non-profit organizations because financial rewards do not exist for shareholders.

The ethical standard of competence states that Management Accountants have a responsibility to perform their professional duties in accordance with relevant laws, regulations and professional standards.

Use the following to answer questions: Perry's Sandwich Department had the following summarized results for the month ending April 30: -If the budget were based on the sale of 13,000 sandwiches at $2.00 each and the actual results reflect the sale of 13,000 sandwiches, identify the most appropriate conclusion in the report to management

Which of the following activities would be included in the value chain of a manufacturing company?

Ignoring income taxes and assuming that cost of goods sold is a constant percentage of sales, calculate the maximum amount that would be economically optimal to spend on a security system if pilferage could be completely eliminated. The Linden chain of ladies' fashion wear wishes to appraise its security system in an effort to reduce pilferage for the coming period. The following details are estimated for the current period:

Removing obstacles to change is an important feature of successful organizational change.

Cross Functional Decision Making:

The Callahans are considering moving to a town approximately 20 minutes away. Because of the desirability of the local schools and strict zoning, housing is very expensive in this town. Their daughter would attend public schools. The Facts estimate that their monthly mortgage, taxes and insurance would increase to $7,000 per month, while the cost of running automobiles would increase 20% and other utilities 10%. Mortgage interest costs are tax deductible and the Facts are in the 25% tax bracket. Assume that $700 of the increase in their monthly budget is for mortgage interest. What are the costs and benefits of moving? Which can be quantified and which cannot? The Callahan family currently lives in a suburb of a major city. They have a lovely home close to major routes of transportation. Both Mr. and Mrs. Callahan have convenient commutes of 30 minutes or less. Because the school system in their town does not have a quality reputation, they currently send their daughter to private school, conveniently located less than one mile from their home. The family's current monthly living expenses are listed below:

Use the following to answer questions: In the Management's Discussion and Analysis section of its 2005 annual report, the CEO of McDonald's Corporation discussed the strategic direction and financial performance of the company by referring to the comprehensive revitalization plan initiated by the company in 2003: "in 2003, the Company initiated a comprehensive revitalization plan focused on maximizing customer satisfaction and strengthening our financial position. We redefined our strategy to emphasize growth through adding more customers to existing restaurants and aligned the System around our customer- focused Plan to Win. We streamlined processes such as new product development and restaurant operations, improved our training programs, and implemented performance measures, including a restaurant review and measurement process, to enable and motivate franchisees and restaurant employees to serve customers better." Among the improvements cited were: (1) Improving the taste of many of the core offerings (2) Streamlining processes such as new product development and restaurant operations (3) Implemented performance measures to enable and motivate franchises to service customers better (4) Achieved high levels of customer awareness worldwide During 2005, McDonald's comparable sales increased 3.9%, earnings per share increased from $1.79 to $2.04, cash from operations increased $433 million to $4.3 billion and the company repurchased $1.2billion in common stock. (McDonald's 2005 Annual Report) -Improvement number 3 is an example of which link in the value chain?

Match the following operations with appropriate elements of an organization's value chain. Value Chain Element -Contracting with Federal Express to ship computers to customers at Gateway.

Two major questions asked in strategic decision making are "where" and "who."

Promoting the idea of continually finding ways to help organizations make the right decisions to create more customer value at lower cost is an example of the characteristic of the:

The extended value chain encompasses the ways companies obtain their resources and distribute their products and services, possibly using the services of other organizations.