Exam 1: Cost Management and Strategy

The controller of one division of a large diversified firm is compensated by salary plus bonus. The bonus is a significant part of total compensation, and is based directly on the profits of the division. Thus, the controller has an incentive to find ways to increase profits, including the delay of discretionary expenses such as research and development, delay of maintenance and repair of manufacturing equipment, and delay of sales promotions. Required: Is finding ways to increase profits as described above unethical? Why or why not? Who is to blame, if anyone?

Cost management has moved from a traditional role of product costing and operational control to a broader strategic focus, which places an emphasis on:

In keeping with the current trend of increased strategic planning, how have management accountants changed their use of life-cycle costing?

Which of the following is considered to be an advantage of using both nonfinancial and financial information in the balanced scorecard?

The national sales manager for your company has pulled you aside and asked you to prepare a sales document (bill) for one of the company's largest clients before the end of the fiscal year which ends this month. This sales document will include items that have not yet been shipped and are not planned for shipment until after this fiscal year. What should you do in this situation?

Which of the following is not considered part of the Institute of Management Accountants' definition of management accounting?

Which of the following is the primary user of management accounting information regarding business units?

Samsung, the large Korean manufacturer of electronics, has just developed a new 80-inch plasma TV. The TV is expected to retail in the range of $50,000. Normally, Samsung sells its TVs and other electronics in Big Box retailers such as Best Buy. In this case, Samsung is thinking of choosing a different means to retail the product. Required: What retail store or stores, or what method would you suggest Samsung should use in selling its new TV?

Of the following, which aspect of a contemporary management technique is a framework and process that organizations use to manage the occurrence of possible events that could negatively or positively affect the company's competitiveness and success?

All of the following actions enhance the new focus on making management accounting information more relevant in helping a firm achieve strategic goals, except:

Which of the following is not a contemporary management technique used by the management accountant to focus on process improvement?

With the enactment of the Sarbanes-Oxley Act of 2002, all public companies are now required by the SEC to disclose whether or not the company has:

Strategic management can be defined as the development of a sustainable:

Which of the following is not a benefit of using a lean manufacturing system?

The difference between wholesalers and retailers is:

Corporate management is required to identify and solve problems from a cross-functional view. Instead of viewing a problem as related to a specific business function, management solves these problems by combining skills from different functions simultaneously. This approach is called:

Which of the following is not a consequence of lack of strategic information?

Cost management information typically is the responsibility of the:

If a firm decided to reevaluate and reorganize the way it did business, in hopes of creating competitive advantage, by changing or decreasing jobs, the company would be using which of the following management technique?

As an inspector for a manufacturer of specialized electronic instruments, you head up the quality assurance program at one of the firm's manufacturing plants. In recent days, it has come to your attention that a large order involving several hundred expensive instruments for an important customer does not meet all the required specifications. Specifically, the circuit which has been designed by your firm to warn the user of possible malfunction does not appear to work consistently. The firm's engineers say that the problem should have no significant results for the customer, as it does not affect the functionality of the instrument in any way. Moreover, the engineers indicate that it is a high priority for them to find an answer to the mysterious behavior of the circuit, and they will develop a fix as soon as possible, and make sure the customer is provided the fix, probably as part of a routine update or maintenance. The marketing V.P. indicates that the customer wants these instruments urgently, and that no quality assurance issues will get in the way. The quality assurance head knows that the order is very important to the firm, as the firm has faced declining revenues in several recent months. Also, while the intentions of the engineers are likely to be sincere, the quality assurance head knows that they are very busy with current and new products, and are unlikely to have the time to deal with this problem in a timely manner. Required: What are the ethical issues involved in the case for the quality assurance head? What steps would you suggest be taken?