TESTj BANKjFOR
ManagerialjAccountingj4thjEditionjbyjCharlesjE.jDavis
Chapterj1
AccountingjasjajTooljforjManagement
CHAPTERjLEARNINGjOBJECTIVES
1. Definejmanagerialjaccountingj(Unitj1.1)
Therejarejseveraljformaljdefinitionsjofjmanagerialjaccounting.jAjsimplejonejisj“thejgenerati
onjofjrelevantjinformationjtojsupportjmanagement’sjdecision-makingjactivities.”
2. Describejthejdifferencesjbetweenjmanagerialjandjfinancialjaccountingj(
Unitj1.1)
Managerialjaccounting’sjprimaryjusersjarejmanagersjandjdecisionjmakersjwithinjanjorgan
ization,jwhereasjfinancialjaccountingjisjaimedjprimarilyjatjexternaljusers.jUnlikejGAAPjtha
tjguidesjfinancialjaccounting,jtherejarejnojmandatedjrulesjinjmanagerialjaccounting.jMan
agerialjaccountingjreportsjfocusjonjoperatingjsegments,jwhilejfinancialjaccountingjstatem
entsjreportjresultsjforjthejorganizationjasjajwhole.jManagerialjaccountingjisjconcernedjm
orejwithjprojectingjfuturejresultsjthanjreportingjpastjresults.jManagerialjinformationjisjpr
eparedjtojtakejadvantagejofjajwindowjofjopportunity,jevenjifjsomejaccuracyjmustjbejsacrif
iced.jFinancialjaccountingjinformationjisjbalancedjtojthejpennyjandjisjdeliveredjafterjtheje
ndjofjthejaccountingjperiod.
3. Listjandjdescribejthejfourjfunctionsjofjmanagersj(Unitj1.1)
Planningjmeansjsettingjajdirectionjforjthejorganization.jLong-
term,jorjstrategicjplanningjprovidesjdirectionjforjajfive-jtojten-yearjperiod.jShort-
termjorjoperationaljplanningjprovidesjmorejdetailedjguidancejforjthejcomingjyear;jitjtrans
latesjthejcompany’sjstrategyjintojactionjsteps.jControllingjisjthejmonitoringjofjday-to-
dayjoperationsjtojidentifyjanyjproblemsjthatjrequirejcorrectivejaction.jEvaluatingjisjthejpr
ocessjof
comparingjajparticularjperiod’sjactualjresultsjtojplannedjresults,jforjthejpurposejofjassessi
ngjmanagerialjperformance.jDecisionjmakingjmeansjchoosingjbetweenjalternativejcourse
sjofjaction.
4. Explainjhowjthejselectionjofjajparticularjbusinessjstrategyjdeterminesjthejin
formationjthatjmanagersjneedjtojrunjanjorganizationjeffectivelyj(Unitj1.2)
Tojrunjajbusinessjeffectively,jmanagersjneedjinformationjthatjshowsjhowjwell
operationsjarejmeetingjthejorganization’sjstrategicjgoals.jForjinstance,jifjthe
organization’sjstrategyjisjtojbejajlow-
costjproducer,jinformationjaboutjproductjcostsjandjcostjvariancesjwilljbejmorejusefuljt
ojmanagersjthanjinformationjaboutjresearchjandjdevelopment.
,5. Discussjthejimportancejofjethicaljbehaviorjinjmanagerialjaccountingj(Unitj1.
3)
Ethicaljbehaviorjmeansjknowingjrightjfromjwrongjandjthenjdoingjthejrightjthing.jManyjco
mpaniesjandjmostjprofessionaljorganizationsjhavejcodesjofjconductjtojguide
employees’jactions.jActingjunethicallyjcanjleadjtojillegaljactivityjandjultimatelyjtojthejdest
ructionjofjthejfirm.jFurthermore,jresearchjhasjshownjthatjajpublicjcommitmentjtojethicalj
behaviorjcanjleadjtojsuperiorjfinancialjperformance.
, TRUE-FALSEjSTATEMENTS
1. Managementjaccountingjisjthejgenerationjofjrelevantjinformationjandjanalysisjprovidedjtojexternaljus
ers.
Ans:jFalsej–jManagementjaccountingjisjthejgenerationjofjrelevantjinformationjandjanalysisjtojsupportjmanagers’jdecision-
jmakingjactivities,jLO:j1,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
2. ThejAmericanjInstitutejofjCertifiedjPublicjAccountantsjisjthejleadingjorganizationjforjmanagementjac
countantsjinjthejUnitedjStates.
Ans:jFalsej–
jThejInstitutejofjManagementjAccountantsj(IMA)jisjthejleadingjorganizationjforjmanagementjaccountantsjinjthejUnitedjStates
,jLO:j1,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
3. Thejprimaryjusersjofjmanagerialjaccountingjinformationjarejmanagersjandjotherjinternaljdecision-
jmakers.
Ans:jTrue,j LO:j2,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
4. Managerialjaccountingjprovidesjreportsjandjinformationjforjajrangejofjdecisionjmakersjoutsidejanjor
ganization.
Ans:jFalsej–
jManagerialjaccountingjprovidesjreportsjandjinformationjforjajrangejofjdecisionjmakersjwithinjanjorganization,jLO:j2,jBloom:jC,jU
nit:j1-1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
5. Managerialjaccountingjdiffersjfromjfinancialjaccountingjinjthatjmanagerialjaccountingjhasjnojcom
parablejsetjofjrulesjgoverningjwhatjinformationjmustjbejprovidedjtojdecision-
makersjorjhowjthatjinformationjisjpresented.
Ans:jTrue,jLO:j2,jBloom:jC,jUnit:j1-1,jDifficulty:jEasyjMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
6. Managerialjaccountingjusesjhistoricaljinformation,joftenjwithjthejpurposejofjcomparingjactualjre
sultsjtojbudgetedjresults.
Ans:jTrue,jLO:j2,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
7. Decisionjmakersjmightjhavejajlongjlistjofjinformationjtheyjwouldjfindjhelpful,jandjtheyjarejgenerally
notjwillingjtojsacrificejaccuracyjforjhavingjthejinformationjquickly.
Ans:jFalsej–
jDecisionjmakersjmightjhavejajlongjlistjofjinformationjtheyjwouldjfindjhelpful.jButjsometimesjtheyjmightjneedjtojsacrificejprecisi
onjforjtimeliness,jLO:j2,jBloom:jC,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
8. Managerialjaccountingjisjdesignedjtojassistjmanagersjwithjfourjgeneraljactivities:jplanning,jc
ontrolling,jevaluating,jandjdecisionjmaking.
Ans:jTrue,jLO:j3,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
9. Long-termjplanningjisjoftenjreferredjtojasjreporting.
Ans:jTrue,jLO:j3,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
, 10. Onejpurposejofjplanningjactivitiesjisjtojmonitorjday-to-
dayjoperationsjtojensurejthatjprocessesjarejoperatingjasjexpected.
Ans:jFalsej–jOnejpurposejofjcontrollingjactivitiesjisjtojmonitorjday-to-
dayjoperationsjtojensurejthatjprocessesjarejoperatingjasjexpected,jLO:j3,jBloom:jC,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
11. Alljotherjthingsjheldjequal,jthejmorejfrequentjthejcontrollingjactivity,jthejfasterjanjout-of-
controljprocessjcanjbejcorrected.
Ans:jTrue,jLO:j3,jBloom:jC,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
12. Thejtaskjofjassessingjhowjwelljemployeesjhavejperformedjrelativejtojexpectationsjisjajcontrollingjac
tivity.
Ans:jFalsej–
jThejtaskjofjaccessingjhowjwelljemployeesjhavejperformedjrelativejtojexpectationsjisjconsideredjanjevaluationjactivity,jLO:j3,jBl
oom:jK,jUnit:j1-1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalyticjAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
13. Preparersjofjmanagerialjaccountingjinformationjarejgenerallyjnotjactivejparticipantsjinjthejdecision-
jmakingjprocess.
Ans:jFalsej–
jPreparersjofjmanagerialjaccountingjinformationjarejnojlongerjsolelyjnumberjcrunchers,jbutjactivejparticipantsjinjthejdecision-
makingjprocess,jLO:j3,jBloom:jC,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
14. Managerialjaccountingjinformationjisjalwaysjpreparedjbyjthejcontrollerjorjcostjaccountant.jAns:jF
alsej–
jManagerialjaccountingjinformationjcanjbejprovidedjbyjajcontroller,jajplantjaccountant,jajcostjaccountant,jajfinancialjanal
yst,jajbudgetjorjcostjanalyst,jajgeneraljaccountant,jorjevenjajchiefjfinancialjofficer,jLO:j3,jBloom:jC,jUnitj1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
15. Managerialjaccountingjinformationjprovidesjfeedbackjaboutjhowjwelljthejorganizationjisji
mplementingjitsjstrategyjandjachievingjitsjgoals.
Ans:jTrue,jLO:j4,jBloom:jK,jUnitj1-2,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jStrategy
16. Forjthejproductjdifferentiationjstrategy,jcompaniesjwilljwantjinformationjonjquality,jsuchjasjdefectjra
tes,jpercentagejofjon-timejdeliveries,jandjcustomerjsatisfaction.
Ans:jTrue,jLO:j4,jBloom:jK,jUnitj1-2,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jStrategy
17. Ifjajcompanyjfollowsjajstrategyjofjproductjdifferentiation,jitjwilljseekjwaysjtojsetjitsjproductsjapart
fromjcompetitors’jinjtermsjofjquality,jdesignjorjservice.
Ans:jTrue,jLO:j4,jBloom:jK,jUnitj1-2,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jStrategy
18. Ajcompanyjthatjfocusesjonjproductjdifferentiationjdoesjnotjneedjtojmonitorjproductjcostsjbecausejifjt
hejqualityjisjsufficient,jcustomersjwilljpayjthejprice.
Ans:jFalsej–
jAjcompanyjthatjfocusesjonjproductjdifferentiationjmustjmonitorjproductjcostsjbecausejifjtoojmuchjcostjisjincurredjforjquality,jth
ejsalesjpricejwilljbejtoojhighjtojbejcompetitive,jLO:j4,jBloom:jC,jUnitj1-
2,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jStrategy
ManagerialjAccountingj4thjEditionjbyjCharlesjE.jDavis
Chapterj1
AccountingjasjajTooljforjManagement
CHAPTERjLEARNINGjOBJECTIVES
1. Definejmanagerialjaccountingj(Unitj1.1)
Therejarejseveraljformaljdefinitionsjofjmanagerialjaccounting.jAjsimplejonejisj“thejgenerati
onjofjrelevantjinformationjtojsupportjmanagement’sjdecision-makingjactivities.”
2. Describejthejdifferencesjbetweenjmanagerialjandjfinancialjaccountingj(
Unitj1.1)
Managerialjaccounting’sjprimaryjusersjarejmanagersjandjdecisionjmakersjwithinjanjorgan
ization,jwhereasjfinancialjaccountingjisjaimedjprimarilyjatjexternaljusers.jUnlikejGAAPjtha
tjguidesjfinancialjaccounting,jtherejarejnojmandatedjrulesjinjmanagerialjaccounting.jMan
agerialjaccountingjreportsjfocusjonjoperatingjsegments,jwhilejfinancialjaccountingjstatem
entsjreportjresultsjforjthejorganizationjasjajwhole.jManagerialjaccountingjisjconcernedjm
orejwithjprojectingjfuturejresultsjthanjreportingjpastjresults.jManagerialjinformationjisjpr
eparedjtojtakejadvantagejofjajwindowjofjopportunity,jevenjifjsomejaccuracyjmustjbejsacrif
iced.jFinancialjaccountingjinformationjisjbalancedjtojthejpennyjandjisjdeliveredjafterjtheje
ndjofjthejaccountingjperiod.
3. Listjandjdescribejthejfourjfunctionsjofjmanagersj(Unitj1.1)
Planningjmeansjsettingjajdirectionjforjthejorganization.jLong-
term,jorjstrategicjplanningjprovidesjdirectionjforjajfive-jtojten-yearjperiod.jShort-
termjorjoperationaljplanningjprovidesjmorejdetailedjguidancejforjthejcomingjyear;jitjtrans
latesjthejcompany’sjstrategyjintojactionjsteps.jControllingjisjthejmonitoringjofjday-to-
dayjoperationsjtojidentifyjanyjproblemsjthatjrequirejcorrectivejaction.jEvaluatingjisjthejpr
ocessjof
comparingjajparticularjperiod’sjactualjresultsjtojplannedjresults,jforjthejpurposejofjassessi
ngjmanagerialjperformance.jDecisionjmakingjmeansjchoosingjbetweenjalternativejcourse
sjofjaction.
4. Explainjhowjthejselectionjofjajparticularjbusinessjstrategyjdeterminesjthejin
formationjthatjmanagersjneedjtojrunjanjorganizationjeffectivelyj(Unitj1.2)
Tojrunjajbusinessjeffectively,jmanagersjneedjinformationjthatjshowsjhowjwell
operationsjarejmeetingjthejorganization’sjstrategicjgoals.jForjinstance,jifjthe
organization’sjstrategyjisjtojbejajlow-
costjproducer,jinformationjaboutjproductjcostsjandjcostjvariancesjwilljbejmorejusefuljt
ojmanagersjthanjinformationjaboutjresearchjandjdevelopment.
,5. Discussjthejimportancejofjethicaljbehaviorjinjmanagerialjaccountingj(Unitj1.
3)
Ethicaljbehaviorjmeansjknowingjrightjfromjwrongjandjthenjdoingjthejrightjthing.jManyjco
mpaniesjandjmostjprofessionaljorganizationsjhavejcodesjofjconductjtojguide
employees’jactions.jActingjunethicallyjcanjleadjtojillegaljactivityjandjultimatelyjtojthejdest
ructionjofjthejfirm.jFurthermore,jresearchjhasjshownjthatjajpublicjcommitmentjtojethicalj
behaviorjcanjleadjtojsuperiorjfinancialjperformance.
, TRUE-FALSEjSTATEMENTS
1. Managementjaccountingjisjthejgenerationjofjrelevantjinformationjandjanalysisjprovidedjtojexternaljus
ers.
Ans:jFalsej–jManagementjaccountingjisjthejgenerationjofjrelevantjinformationjandjanalysisjtojsupportjmanagers’jdecision-
jmakingjactivities,jLO:j1,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
2. ThejAmericanjInstitutejofjCertifiedjPublicjAccountantsjisjthejleadingjorganizationjforjmanagementjac
countantsjinjthejUnitedjStates.
Ans:jFalsej–
jThejInstitutejofjManagementjAccountantsj(IMA)jisjthejleadingjorganizationjforjmanagementjaccountantsjinjthejUnitedjStates
,jLO:j1,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
3. Thejprimaryjusersjofjmanagerialjaccountingjinformationjarejmanagersjandjotherjinternaljdecision-
jmakers.
Ans:jTrue,j LO:j2,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
4. Managerialjaccountingjprovidesjreportsjandjinformationjforjajrangejofjdecisionjmakersjoutsidejanjor
ganization.
Ans:jFalsej–
jManagerialjaccountingjprovidesjreportsjandjinformationjforjajrangejofjdecisionjmakersjwithinjanjorganization,jLO:j2,jBloom:jC,jU
nit:j1-1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
5. Managerialjaccountingjdiffersjfromjfinancialjaccountingjinjthatjmanagerialjaccountingjhasjnojcom
parablejsetjofjrulesjgoverningjwhatjinformationjmustjbejprovidedjtojdecision-
makersjorjhowjthatjinformationjisjpresented.
Ans:jTrue,jLO:j2,jBloom:jC,jUnit:j1-1,jDifficulty:jEasyjMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
6. Managerialjaccountingjusesjhistoricaljinformation,joftenjwithjthejpurposejofjcomparingjactualjre
sultsjtojbudgetedjresults.
Ans:jTrue,jLO:j2,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
7. Decisionjmakersjmightjhavejajlongjlistjofjinformationjtheyjwouldjfindjhelpful,jandjtheyjarejgenerally
notjwillingjtojsacrificejaccuracyjforjhavingjthejinformationjquickly.
Ans:jFalsej–
jDecisionjmakersjmightjhavejajlongjlistjofjinformationjtheyjwouldjfindjhelpful.jButjsometimesjtheyjmightjneedjtojsacrificejprecisi
onjforjtimeliness,jLO:j2,jBloom:jC,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
8. Managerialjaccountingjisjdesignedjtojassistjmanagersjwithjfourjgeneraljactivities:jplanning,jc
ontrolling,jevaluating,jandjdecisionjmaking.
Ans:jTrue,jLO:j3,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
9. Long-termjplanningjisjoftenjreferredjtojasjreporting.
Ans:jTrue,jLO:j3,jBloom:jK,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
, 10. Onejpurposejofjplanningjactivitiesjisjtojmonitorjday-to-
dayjoperationsjtojensurejthatjprocessesjarejoperatingjasjexpected.
Ans:jFalsej–jOnejpurposejofjcontrollingjactivitiesjisjtojmonitorjday-to-
dayjoperationsjtojensurejthatjprocessesjarejoperatingjasjexpected,jLO:j3,jBloom:jC,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
11. Alljotherjthingsjheldjequal,jthejmorejfrequentjthejcontrollingjactivity,jthejfasterjanjout-of-
controljprocessjcanjbejcorrected.
Ans:jTrue,jLO:j3,jBloom:jC,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jReporting
12. Thejtaskjofjassessingjhowjwelljemployeesjhavejperformedjrelativejtojexpectationsjisjajcontrollingjac
tivity.
Ans:jFalsej–
jThejtaskjofjaccessingjhowjwelljemployeesjhavejperformedjrelativejtojexpectationsjisjconsideredjanjevaluationjactivity,jLO:j3,jBl
oom:jK,jUnit:j1-1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalyticjAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
13. Preparersjofjmanagerialjaccountingjinformationjarejgenerallyjnotjactivejparticipantsjinjthejdecision-
jmakingjprocess.
Ans:jFalsej–
jPreparersjofjmanagerialjaccountingjinformationjarejnojlongerjsolelyjnumberjcrunchers,jbutjactivejparticipantsjinjthejdecision-
makingjprocess,jLO:j3,jBloom:jC,jUnit:j1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
14. Managerialjaccountingjinformationjisjalwaysjpreparedjbyjthejcontrollerjorjcostjaccountant.jAns:jF
alsej–
jManagerialjaccountingjinformationjcanjbejprovidedjbyjajcontroller,jajplantjaccountant,jajcostjaccountant,jajfinancialjanal
yst,jajbudgetjorjcostjanalyst,jajgeneraljaccountant,jorjevenjajchiefjfinancialjofficer,jLO:j3,jBloom:jC,jUnitj1-
1,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jBusinessjOperations
15. Managerialjaccountingjinformationjprovidesjfeedbackjaboutjhowjwelljthejorganizationjisji
mplementingjitsjstrategyjandjachievingjitsjgoals.
Ans:jTrue,jLO:j4,jBloom:jK,jUnitj1-2,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jStrategy
16. Forjthejproductjdifferentiationjstrategy,jcompaniesjwilljwantjinformationjonjquality,jsuchjasjdefectjra
tes,jpercentagejofjon-timejdeliveries,jandjcustomerjsatisfaction.
Ans:jTrue,jLO:j4,jBloom:jK,jUnitj1-2,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jStrategy
17. Ifjajcompanyjfollowsjajstrategyjofjproductjdifferentiation,jitjwilljseekjwaysjtojsetjitsjproductsjapart
fromjcompetitors’jinjtermsjofjquality,jdesignjorjservice.
Ans:jTrue,jLO:j4,jBloom:jK,jUnitj1-2,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jStrategy
18. Ajcompanyjthatjfocusesjonjproductjdifferentiationjdoesjnotjneedjtojmonitorjproductjcostsjbecausejifjt
hejqualityjisjsufficient,jcustomersjwilljpayjthejprice.
Ans:jFalsej–
jAjcompanyjthatjfocusesjonjproductjdifferentiationjmustjmonitorjproductjcostsjbecausejifjtoojmuchjcostjisjincurredjforjquality,jth
ejsalesjpricejwilljbejtoojhighjtojbejcompetitive,jLO:j4,jBloom:jC,jUnitj1-
2,jDifficulty:jEasy,jMin:j1,jAACSB:jAnalytic,jAICPAjFN:jReporting,jAICPAjPC:jNone,jIMA:jStrategy
