1. Cost-based pricing systems invariably involve pricing products based on their full absorption costs. Is it True or False?
2. Target costing is generally more beneficial with products that have a short life cycle rather than a long life cycle. Is it True or False?
3. Kaizen costing is the Japanese term for continuous improvement. Is it True or False?
4. Benchmarking is actually just a formalized approach to determining best practices in the same industry and in other industries. Is it True or False?
5. Which of the following actions is most likely to result from a company exploiting value-enhancing opportunities across the value chain?
a. Reducing the quality of the product or service provided.
b. Decreasing the number of suppliers relied upon for delivering input products and services.
c. Increasing the amount of inventory carried during the fiscal period.
d. Increasing the number of processes involved in producing a product.
6. Value chain concepts view relationships with suppliers as representing:
a. An extended business partner.
b. A formal corporate merger.
c. Complex logistical problems.
d. An opportunity to gain a competitive bargaining position over the supplier.
7. In a cost-based pricing approach, the last amount to be determined is:
a. Discretionary fixed cost.
b. Sales price
c. Manufacturing cost
d. Variable cost.
8. -------------- is when the product loses market acceptance.
a. The growth stage
b. The decline stage
c. The maturity stage
d. The start-up stage
9. Which of the following statements concerning target costing is not true?
a. Short product life cycles increase the importance of target costing.
b. Target costing can be applied to components of products as well as the new products as a whole.
c. A primary advantage of target costing is that it requires little or no coordination among processes.
d. Implementing target costing requires detailed information on the cost of alternative activities.
10. The traditional justifications of budgeting include improved communications, improved planning, and improved sales. Is it True or False?
11. A more traditional budget would emphasize expense categories such as salaries, office supplies, and maintenance, while an activity-based budget would emphasize activities performed. Is it True or False?
12. A budget that summarizes all receipts and disbursements expected to occur during the budget period is called a receipts and disbursements budget. Is True or False?
13. The most appropriate and commonly followed sequences of preparing budget schedules is to prepare the sales budget, followed by the production budget, followed by the purchases budget. Is it True or False?
14. Which of the following factors is not an advantage of preparing operating budgets?
a. Improved communications
b. Improved basis of performance evaluation
c. Improved planning
d. Increased employee loyalty
15. Budgets improve ---------- and ----------
a. Information, revenues
b. Communication, coordination
c. Communication, profits
d. Revenues, profits
16. Which of the following is not a common approach to developing a budget?
a. The incremental approach
b. The minimum level approach
c. The qualitative approach
d. The input/output approach
17. Which budgeting approach predicts a cost objective's budget by anticipating the consumption of cost drivers?
a. The activity-based approach
b. Participation budgeting
c. The continuous budgeting approach
d. The input/output approach
18. All of the following are true of sales budget except:
a. It contains a forecast of unit sales volume
b. It contains a forecast of sales dollars
c. It may contain a forecast of Kaizen activities
d. It may contain a forecast of sales collections
19. Which of the following statements concerning the cash budget is true?
a. The cash budget summarizes all cash receipts and disbursements during the budget period
b. The cash budget summarizes all sales and expenses during the budget period.
c. The cash budget summarizes all revenues and expenses during the budget period
d. The cash budget summarizes all economic activities during the budget period.
20. Which of the following items is not typically considered in the development of the cash budget?
a. Depreciation Expense
b. Purchases
c. Administrative expenses
d. Selling expenses
21. In a manufacturing setting, the purchase budget is based on:
a. The sales budget
b. The production budget
c. The manufacturing budget
d. The cash disbursements
22. Which of the following aspects related to budgeting and human behavior is not correct?
a. The preparation period for a participative budget is generally longer than that for an imposed budget.
b. A disadvantage of the use of budgets is that they always decrease employee motivation
c. Budgets often produce strong reactions in people
d. Personnel who do not participate in budget preparation are likely to lack a commitment in achieving their part of the budget.
23. Post-audits create an incentive for managers to make accurate estimates, since managers know their results will be evaluated. Is it True or False?
24. The net present value method can only be used in capital budgeting if the expected cash flows from the project are an equal amount each year. Is it True or False?
25. To avoid accepting projects that actually should be rejected; a company should ignore all non-quantitative benefits in evaluating net present value. Is True or False?