Management Accounting & Strategy Flashcards
7 cards from real CPA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Management Accounting & Strategy flashcards as text
Which variance measures the difference between the actual hours worked and the standard hours allowed for actual production, multiplied by the standard labor rate?
Answer: Labor efficiency variance
Labor efficiency variance = (Actual hours - Standard hours allowed) × Standard rate, measuring productivity relative to expectations.
A company is considering dropping a product line that shows a net loss. The product line should be retained if:
Answer: Its contribution margin exceeds the avoidable fixed costs that would be eliminated
A segment should be retained when its contribution margin covers the costs that would actually be eliminated (avoidable costs) upon discontinuation.
In the context of the Balanced Scorecard, a 'strategy map' is used to:
Answer: Illustrate cause-and-effect relationships between strategic objectives across perspectives
A strategy map visually depicts how objectives in learning & growth lead to better processes, which drive customer satisfaction, which drives financial results.
Total quality management (TQM) classifies 'appraisal costs' as costs incurred to:
Answer: Detect defects through inspection and testing
Appraisal costs include inspection, testing, and quality audits performed to identify defective products before they reach customers.
A firm using residual income (RI) as a performance measure will accept a new investment if:
Answer: The investment's net operating income exceeds the required return on invested capital
Residual income = NOI - (Required rate × Invested capital); a positive RI means the investment earns more than the minimum required return.
A SWOT analysis is most directly used in strategic management to:
Answer: Assess internal strengths/weaknesses against external opportunities/threats
SWOT analysis evaluates internal capabilities and limitations alongside external environmental factors to inform strategic decision-making.
Kaizen costing focuses on:
Answer: Continuous incremental cost reduction during the manufacturing phase
Kaizen costing applies continuous improvement principles to manufacturing, seeking ongoing incremental cost reductions after production begins.