Mac3701 Exam Questions with Correct
Answers
briefly explain what strategic management accounting is - Answer-strategic
management accounting is an approach to management accounting that explicitly
highlights strategic issues and concerns.
- it sets management accounting in a broader context - in which financial information is
used to develop superior strategies as a means of achieving a sustainable competitive
advantage.
briefly explain the significance of the value chain for strategic management accounting -
Answer-- allows for analysis of activities within and outside a firm
- provides a way of extending view of the firm to outside parties
- provides a frame of reference to include external information into decision making
- links suppliers, wholesalers, retailers etc to the organization and decision making.
briefly describe how the value chain concept can contribute to the management of costs
- Answer-the value chain can provide framework to analyze activities inside and outside
the firm to identify value adding and non value adding activities.
- non value adding activities can be targeted for cost reduction/removal
- value adding actives can be targeted to increase value - increasing value to cost
comparison.
briefly explain and identify the steps involved in target costing. - Answer-1. determine
product target price, quality and functionality
2. determine target cost (target cost= price-required profit margin)
3. design product and production process to achieve target cost
4. use pilot project to evaluate feasibility.
explain how kaizen costing can be used to reduce costs in a product approaching the
maturity stage of its lifecycle - Answer-- sets predictions or desired cost reduction into
cost goals
- explicitly sets cost reduction goals into targets
- focus on cost reduction to allow price reduction to maintain sales in mature product
- can be used to identify cost savings based on process experience or knowledge.
briefly explain target costing - Answer-Target costing is the process of researching
consumer markets to estimate an appropriate price, then subtracting desired return to
determine a max allowable cost. This target cost is the max cost at which an entity can
produce a good or service to generate the desired profit margin.
, identify two factors that affect target costing successful implementation - Answer--
length of product and design phases
- complexity of production process
- market willingness to pay for differentiations.
briefly explain the difference between target costing and kaizen costing - Answer--
kaizen costing is focused on constant improvement
- target costing is focused on designing a product that meets customers requirements
for a cost that provides the required profit margin for the firm.
briefly explain what strategy is - Answer-strategy is the future direction of the company
in term of the lines of business the company plans to engage in and the positioning of
its products in the markets per chosen competitive strategy,
briefly explain the difference between strategy and control - Answer-- strategy is the
company future direct as formulation via the strategic decision making at the strategic
levels of management; control are decisions that seek to ensure strategy is formulated
and implemented in a controlled manner and operations are executed as intended for
the adopted strategy.
- control has both significant behavioural and informational components whilst strategy
is chiefly informational
- whilst mostly, strategy informs control, control also inform strategy in as much as early
detection of change in any aspect of operating environment could feed back into
strategy formulation
- the difference is one sets the objective and plans the other, control, is the system
designed to influence and facilitate decision making in the organization to achieve the
strategic goals.
briefly explain how management accounting can link strategic planning and control -
Answer-refer to simons lever of control framework.
- management aims to link strategy and control.
- it ensure that strategy is considered when making operational short term decisions.
define sustainability management - Answer-sustainability management in the
measuring, monitoring and simultaneous control of environmental, economic and social
aspects go a business to maximize profits while minimizing environmental and social
impacts.
briefly explain the difference between strategy and control - Answer-strategy - set the
objective or goals or an organization and how they will be achieved
control- the system put in place to ensure strategic goals are achieved and source and
decisions are geared towards achieving the strategic goals.
briefly describe the link between strategy and control - Answer-strategy informs the
particular management control system tools and practices that would be needed to be
implemented by a business in its management accounting system designed to enable
Answers
briefly explain what strategic management accounting is - Answer-strategic
management accounting is an approach to management accounting that explicitly
highlights strategic issues and concerns.
- it sets management accounting in a broader context - in which financial information is
used to develop superior strategies as a means of achieving a sustainable competitive
advantage.
briefly explain the significance of the value chain for strategic management accounting -
Answer-- allows for analysis of activities within and outside a firm
- provides a way of extending view of the firm to outside parties
- provides a frame of reference to include external information into decision making
- links suppliers, wholesalers, retailers etc to the organization and decision making.
briefly describe how the value chain concept can contribute to the management of costs
- Answer-the value chain can provide framework to analyze activities inside and outside
the firm to identify value adding and non value adding activities.
- non value adding activities can be targeted for cost reduction/removal
- value adding actives can be targeted to increase value - increasing value to cost
comparison.
briefly explain and identify the steps involved in target costing. - Answer-1. determine
product target price, quality and functionality
2. determine target cost (target cost= price-required profit margin)
3. design product and production process to achieve target cost
4. use pilot project to evaluate feasibility.
explain how kaizen costing can be used to reduce costs in a product approaching the
maturity stage of its lifecycle - Answer-- sets predictions or desired cost reduction into
cost goals
- explicitly sets cost reduction goals into targets
- focus on cost reduction to allow price reduction to maintain sales in mature product
- can be used to identify cost savings based on process experience or knowledge.
briefly explain target costing - Answer-Target costing is the process of researching
consumer markets to estimate an appropriate price, then subtracting desired return to
determine a max allowable cost. This target cost is the max cost at which an entity can
produce a good or service to generate the desired profit margin.
, identify two factors that affect target costing successful implementation - Answer--
length of product and design phases
- complexity of production process
- market willingness to pay for differentiations.
briefly explain the difference between target costing and kaizen costing - Answer--
kaizen costing is focused on constant improvement
- target costing is focused on designing a product that meets customers requirements
for a cost that provides the required profit margin for the firm.
briefly explain what strategy is - Answer-strategy is the future direction of the company
in term of the lines of business the company plans to engage in and the positioning of
its products in the markets per chosen competitive strategy,
briefly explain the difference between strategy and control - Answer-- strategy is the
company future direct as formulation via the strategic decision making at the strategic
levels of management; control are decisions that seek to ensure strategy is formulated
and implemented in a controlled manner and operations are executed as intended for
the adopted strategy.
- control has both significant behavioural and informational components whilst strategy
is chiefly informational
- whilst mostly, strategy informs control, control also inform strategy in as much as early
detection of change in any aspect of operating environment could feed back into
strategy formulation
- the difference is one sets the objective and plans the other, control, is the system
designed to influence and facilitate decision making in the organization to achieve the
strategic goals.
briefly explain how management accounting can link strategic planning and control -
Answer-refer to simons lever of control framework.
- management aims to link strategy and control.
- it ensure that strategy is considered when making operational short term decisions.
define sustainability management - Answer-sustainability management in the
measuring, monitoring and simultaneous control of environmental, economic and social
aspects go a business to maximize profits while minimizing environmental and social
impacts.
briefly explain the difference between strategy and control - Answer-strategy - set the
objective or goals or an organization and how they will be achieved
control- the system put in place to ensure strategic goals are achieved and source and
decisions are geared towards achieving the strategic goals.
briefly describe the link between strategy and control - Answer-strategy informs the
particular management control system tools and practices that would be needed to be
implemented by a business in its management accounting system designed to enable
