Horngren’s Cost Accounting A Managerial Emphasis 17th Global Edition by Srikant M. Datar test bank

Answer:  A
Diff: 1
Objective:  5
AACSB:  Analytical thinking
 
2) The scenario that says resources should be spent if the expected benefits to the company exceed the expected costs describes:
A) cost-benefit approach
B) behavioral and technical considerations
C) balanced scorecard
D) different costs for different purposes
Answer:  A
Diff: 1
Objective:  5
AACSB:  Analytical thinking
 
3) Which of the following is true of a budgeting system?
A) It compels managers to plan ahead.
B) It increases agency costs.
C) It is easy to measure the exact benefits of a budgeting system.
D) It leads to operational inefficiency.
Answer:  A
Diff: 2
Objective:  5
AACSB:  Analytical thinking
 
4) In a cost-benefit approach, managers should spend resources if the:
A) marginal costs to the company exceed the marginal benefits
B) expected benefits to the company exceed the expected costs
C) marginal costs to the company equal the marginal benefits
D) expected benefits to the company equal the expected costs
Answer:  B
Diff: 3
Objective:  5
AACSB:  Analytical thinking
 

 
5) Which of the following statements about the cost-benefit approach is true?
A) Resources should be spent if the expected costs exceed the expected benefits of the company.
B) In a cost-benefit analysis, both costs and benefits are not easy to measure.
C) Resources should be spent if the costs of a decision outweigh the benefits of the decision.
D) A cost-benefit approach would not be appropriate for a decision to install a budgeting system.
Answer:  B
Diff: 2
Objective:  5
AACSB:  Analytical thinking
 
6) Exact quantification of costs and benefits is not always possible when making a decision.
Answer:  TRUE
Diff: 1
Objective:  5
AACSB:  Analytical thinking
 
7) The technical considerations of budgeting encourage managers and other employees to strive for achieving the goals of the organization.
Answer:  FALSE
Explanation:  The behavioral considerations of budgeting encourage managers and other employees to strive for achieving the goals of the organization.
Diff: 2
Objective:  5
AACSB:  Analytical thinking
 
8) A cost concept used for the purposes of external reporting will always be appropriate for internal reporting.
Answer:  FALSE
Explanation:  A cost concept used for the purposes of external reporting may not be appropriate for internal, routine reporting. For external reporting, GAAP requires costs to be fully expenses in the year they are incurred. However, those costs could be capitalized and then amortized or written off as expenses over several years.
Diff: 2
Objective:  5
AACSB:  Analytical thinking
 
9) An experienced cost accountant's advice of: "different costs for different purposes" most likely means that that when providing cost information to managers for decision making, you should explore using alternative ways to compute costs because a cost for financial accounting purposes may not be appropriate for internal decision making purposes.
Answer:  TRUE
Diff: 2
Objective:  5
AACSB:  Analytical thinking
 

 
10) Accounting methods for internal reporting purposes are specified by Generally Accepted Accounting Principles (GAAP).
Answer:  FALSE
Explanation:  Accounting methods for internal reporting are not specified by Generally Accepted Accounting principles (GAAP).
Diff: 2
Objective:  5
AACSB:  Analytical thinking
 
11) Discuss the cost-benefit approach guideline management accountants use to provide value in strategic decision making.
Answer:  Management accountants continually face resource allocation decisions. The cost-benefit approach should be used in making these decisions. Resources should be spent if the expected benefits to the company exceed the expected costs. The expected benefits and costs may not be easy to quantify, but it is a useful approach for making resource allocation decisions. Companies now use budgeting system that compels managers to plan ahead, compare actual to budgeted information, learn, and take corrective action.
Diff: 3
Objective:  5
AACSB:  Analytical thinking
 
12) Discuss the behavioral considerations that provide value to strategic decision making.
Answer:  Management is primarily a human activity that should focus on encouraging individuals to do their jobs better. Budgets have a behavioral effect by motivating and rewarding employees for achieving an organization's goals. So, when workers underperform, for example, behavioral considerations suggest that managers need to discuss ways to improve their performance with them rather than just sending them a report highlighting their underperformance.