1.

The five stages in the process of keeping an organization in control are:

planning, implementing, measuring, evaluating and correcting
planning, executing, monitoring, evaluating and correcting
budgeting, implementing, monitoring, evaluation and feedback
budgeting, executing, measuring, feedback and evaluation
2. Which BEST describes the purpose of a management accounting and control system
(MACS)?
A MACS defines the value chain and identifies nonvalue-added activities for a
business.
A MACS helps decision makers determine whether strategies and objectives are
being met.
A MACS offers a system of controls to ensure employees are meeting predetermined
standards.
d. A MACS provides a signal for management attention when areas are out-ofcontrol.
3. Total-life-cycle costing is the name given to:
a method of cost planning to reduce manufacturing costs to targeted levels
the process of examining each component of a product to determine whether its cost
can be reduced
the process of managing all costs along the value chain
a system that focuses on reducing costs during the manufacturing cycle
4. __________ starts with the estimated product costs and next determines the estimated
selling price.
Standard costing
Target costing
Kaizen costing
Traditional costing
5. All of the following are true regarding target costing except that:
improvements are implemented in small, incremental amounts
customer input is collected continually throughout the target costing process
input is requested from suppliers and distributors
a key goal is to minimize ownership costs over the products useful life
6. Relevant costs for target costing include:
variable manufacturing costs
variable manufacturing and variable nonmanufacturing costs
all fixed costs

all future costs, both variable and fixed

7.
The following information applies to Questions 7 through 10.
After conducting a market research study, Schultz Manufacturing decided to produce a
new interior door to complement its exterior door line. It is estimated that the new interior
door can be sold at a target price of $60. The annual target sales volume for interior doors
is 20,000. Schultz has a 20% expected return on sales target.
What are target sales revenues?
$960,000
$2,000,000
$1,200,000
None of the above is correct.
= $60 x 20,000
= $1,200,000
8. What is the target profit margin?
$240,000
$300,000
$192,000
$180,000
= $1,200,000 x 20%
= $240,000
9. What is the target cost?
$900,000
$960,000
$1,260,000
$1,008,000
= $1,200,000 - $240,000
= $960,000
10. What is the target cost for each interior door?
$48
$58
$60

$45
= $960,000 / 20,000
= $48
11. The Balanced Scorecard is said to be balanced because it measures:
short-term and long-term objectives
financial and nonfinancial objectives
internal and external objectives
All of the above are correct.
12. The __________ perspective of the Balanced Scorecard focuses on creating value for
customers.
Value
Financial
Stakeholder
Customer
13. If a performance measure in the customer perspective of the Balanced Scorecard was
customer loyalty, then a driver from the process perspective would MOST likely be:
implementing cutting-edge technology
repeat sales
high-quality production processes
increased profits
14. Which of the following statements is true?
Vision and mission statements set the general direction for the organization.
Strategy is a concise, internally-focused statement of how the organization expects
to compete and deliver value to customers.
Mission is a concise, externally-focused statement that expresses how the
organization wants to be perceived by the external world.
Vision is about selecting the set of activities to create a sustainable difference in the
marketplace.
15. The following information applies to Questions 15 and 16.
Fargo Corporation plans to grow by offering a sound system, the NICX2, which is
superior and unique from the competition. Fargo believes that putting additional
resources into R&D and staying ahead of the competition with technological innovations
is critical to implementing its strategy.

Fargos value proposition is:

product innovation and leadership
lowest total cost
complete customer solutions
employees recognizing customer needs
16. To further the companys strategy, measures on the Balanced Scorecard would MOST
likely include:
shorter cycle times
manufacturing quality
yield
lowest cost supplier
17. The following information applies to Questions 17.
Splashdown Corporation manufactures water toys. It plans to grow by producing highquality water slides at a low cost that are delivered in a timely manner. There are a
number of other manufacturers who produce similar water slides. Splashdown believes
that continuously improving its manufacturing processes and having satisfied employees
are critical to implementing its strategy.
Splashdowns value proposition is:
product innovation and leadership
complete customer solutions
employees recognizing customer needs
lowest total cost
18. Nonprofit and government organizations:
cannot use the Balanced Scorecard because they have no customers
cannot use the Balanced Scorecard because they have no financial objective
may use the Balanced Scorecard by adding a social impact perspective to the
top of the strategy map
may use the Balanced Scorecard by not linking it to mission and strategy
19. To become a strategy-focused organization:
monthly management meetings should focus on variances between actual
performance and what was planned
the budgeting process must protect long-term initiatives from the pressures to
deliver short-term performance
scorecards and priorities should be updated annually when preparing next years
budget

All of the above are correct

20. Successful implementation of the Balanced Scorecard:
may be completed by one important member of the senior management team, such
as the chief financial officer
involves everyone in the organization knowing and understanding the strategy
should not begin until data are collected for all scorecard measures
starts with a process to acquire a new data collection system