The competitive strategy of cost leadership allows a firm


1. Which of the following aspects of a company would not be considered a critical success factor, for a company that competes on differentiation?

A. Cutting edge research and development.
B. Excellent customer service
C. Award-winning product quality
D. Continually beating competitors to the market with new, innovative products
E. High level of production efficiency

2. The competitive strategy of cost leadership allows a firm to outperform competitors by producing products or services:

A. With lowered quality standards, thus reducing overall costs.
B. In smaller operational units.
C. At lower cost achieved by increased productivity.
D. With attractive added features making the product more expensive, or "the cost leader".
E. That are heavily promoted and heavily warranted.

3. Cost management information typically is the responsibility of the:

A. Chief Financial Officer.
B. Controller.
C. Treasurer.
D. Chief Information Officer.

4. Which one of the following critical success customer factors is best measured by warranty expense?

A. Quality.
B. Dealer and distributor efficiency and effectiveness
C. Timeliness of delivery3
D. Customer satisfaction

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

Increasing emphasis on the management accountant as a business partner.
Increasing emphasis on external financial reporting.
Decreasing emphasis on financial statement inventory cost valuation.
Increasing emphasis on timely and useful information.
Increasing emphasis on detailed and accurate costing methods such as ABC costing.

6. According to the IMA Code of Ethics, what should a management accountant do if a significant ethical situation can't be resolved?

The accountant should confront the guilty party and demand the unethical action be stopped.
The accountant should try to rationalize and understand the position of the other party.
The accountant should say nothing about the matter until he or she has retired.
The accountant should first discuss the matter with the immediate supervisor.

7. In SWOT analysis, strengths and weaknesses are most easily identified by looking:

At the firm as a potential customer.
Inside the firm at its specific resources.
At the firm's competition.
At the firm's product.
Outside the firm from a consultant's perspective.

8. RTP Corp. is developing a new computer processor to compete against Intel's successful product line. RTP has already determined the market price and the required profit margin on each processor sold in order to be successful. Which costing method will RTP most likely use to reduce costs and obtain the desired results?

Target Costing.
Product costing.
Relevant costing.
Cost management.

9. The balanced scorecard can be made more effective by developing it at a detail level so that employees:

Can see how it is put together.
Appreciate all the effort that goes into its preparation.
Respect management for including them in its formulation.
Can see how their actions contribute to the success of the firm.
Do not feel left out.

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

Competitive pricing.
Domestic marketing.
Short-term thinking.
Strategic thinking.
Independent judgment.

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

Company management.
Investors.
Creditors.
Industry and governmental organizations.

12. The balanced scorecard:

A. Is not comprehensive, since it doesn't include all the CSFs which contribute to competitive B. success.
B. Helps focus managers' attention to bottom line profits.
C. Is forward looking, stressing nonfinancial measures that can lead to benefits in the future.
D. Fails to reflect environmental and social effects of the firm's operations.
E. Is heavily weighted toward the financial critical success factors (CSFs).

Which of the following could be considered part of the value chain in a service firm?

A. Inspection of product.
B. Advertising.
C. Raw materials.
D. Customer service.
E. Advertising and customer service.

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

A. Partnering in management decision making.
B. Devising planning and performance management systems.
C. Gathering, summarizing, analyzing, and providing information.
D. Providing expertise in financial reporting and control.
E. Assisting management in the formulation and implementation of an organization's strategy.

15. The following problems have occurred at your company: management seems to be making decisions based on guesses and intuition, there's a lack of clarity concerning direction and goals, and profitable opportunities are being missed. What is your company suffering from?

A. A lack of strategic information; management has not determined its strategic competitive position.
B. Managers have too much information.
C. The company is not familiar with business reengineering and value chain analysis.
D. The company has an inappropriate mission statement.

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