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Multiple Choice Quiz
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1
The most important impact of production costs on profitability is through:
A)Net income
B)Inventory value
C)Inventory turns
D)Total equity
2
The most dangerous aspect of using average costs in decision making is that
A)The averages aren't computed correctly.
B)Most people don't include all cases in the average.
C)There usually isn't an "average" product or "average" service.
D)Total costs divided by the number of products would be more accurate.
3
The best summary of the value chain would be:
A)The value chain is a linked set of activities.
B)Each component of the value chain is made up of processes which are made up of activities.
C)The value chain contributes to value by formalizing process steps.
D)The value chain is the weakest link, from a reliability standpoint, of value-adding steps.
4
Accurate assignment of actual costs to product and services is important because:
A)Knowing costs is important to be able to generate profitability.
B)Value is so easy to predict beforehand that costs become more important.
C)Assigning costs to individual workers makes it possible to link performance to pay.
D)Costs provide the most important means of improving productivity.
5
Costs must be allocated whenever:
A)They can be linked directly to objects
B)Management is uncertain about what they are
C)They can't be quantified
D)They cannot be traced precisely to objects
6
The relationship between a standard and a variance is:
A)A standard is a known variance.
B)A variance is the difference between actual performance and the standard.
C)A variance is the difference between a new standard and the old one.
D)A variance is the difference between standards developed correctly and those developed incorrectly.
7
Variance analysis helps guide operations by identifying the:
A)Price variance, usage variance, and the total variance
B)Actual variance and the average variance
C)The difference between the price variance and the cost variance
D)The average variance across all activities
8
If cost per unit is reduced:
A)Profitability must improve
B)Net income must increase
C)Net income could actually drop
D)ROA must improve
9
When tradeoffs are made by managers, short-term costs are often considered more important than long-term costs because:
A)Short term costs are always more important than long-term costs.
B)Long-term costs are underestimated.
C)Most managers know that with enough time, they can eliminate long-term costs.
D)Annual performance reviews weigh both costs equally.
10
The balanced scorecard can best be summarized as:
A)A new approach to measuring cost traceability
B)A method of scoring how well overhead costs are allocated
C)A method of equally weighting production and nonproduction costs
D)An approach to using financial and nonfinancial performance measures for a company





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