[Chapter 8] Activity-Based Management Flashcards
(95 cards)
1
Q
Activity-based management focuses management’s attention on activities resulting in improving customer value and profits.
A
TRUE
2
Q
Activity-based costing does not provide good information for activity-based management.
A
FALSE
3
Q
Activity-based costing is very concerned with waste issues.
A
FALSE
4
Q
The activity-based management model has two dimensions: a cost dimension and a process dimension.
A
TRUE
5
Q
Process value analysis maximizes systemwide performance by emphasizing activity management.
A
TRUE
6
Q
Process value consists of three elements: driver analysis, activity analysis, and performance measurement.
A
TRUE
7
Q
Driver analysis identifies performance levels.
A
FALSE
Driver analysis is the effort expended to identify those factor that are the root causes of activity costs.
8
Q
Performance measurement is concerned with how well activities are performed
A
TRUE
9
Q
Financial measures of performance focus on the dollar effect of activity performance changes.
A
TRUE
10
Q
Reducing non-value added costs decreases activity deficiency.
A
FALSE
11
Q
Cost reduction is a measure of activity improvement.
A
TRUE
12
Q
Kaizen costing is concerned with reducing the costs by identifying small, continuous improvement for existing products and processes.
A
TRUE
13
Q
Implementing an activity-based management requires careful planning and execution.
A
TRUE
14
Q
Identifying, defining, and classifying activities require more attention for ABC than ABM.
A
FALSE
15
Q
One of the major reasons for the failure of ABM is lack of upper management support.
A
TRUE
16
Q
The common steps in implementing activity-based management are systems planning and activity identification, definition, and classification.
A
TRUE
17
Q
A financial-based responsibility accounting system focuses on the assignment of responsibility to organizational units and measures performance in financial terms.
A
TRUE
18
Q
Activity-based responsibility accounting assigns responsibility to processes and uses only nonfinancial measures of performance.
A
FALSE
19
Q
Financial-based responsibility accounting focuses on functional organizational units.
A
TRUE
20
Q
Process improvement refers to incremental and erratic increases in the efficiency of an existing process.
A
FALSE.
Process improvement refers to incremental and continual increases in the efficiency of an existing process.
21
Q
The process of improving performance and constantly eliminating waste is known as __________ .
A
CONTINUOUS IMPROVEMENT
22
Q
The PROCESS that focuses on accountability for activities rather than costs and emphasizes systemwide performance is called __________ .
A
PROCESS VALUE ANALYSIS
23
Q
The resources consumed by the activity in producing its output are called ____________________.
A
ACTIVITY INPUTS
24
Q
Activities that contribute to customer value and are necessary to remain in business are called _____________ activities.
A
VALUE ADDED
25
Well accepted approach for reducing costs by eliminating waste is called ___________ costing.
KAIZEN
26
Activity flexible budgeting differs from traditional approaches by using more than _____________ drivers to predict costs.
UNIT-LEVEL
27
The successful implementation of activity-based management relies on support from higher __________ .
MANAGEMENT
28
The system that provides the justification for implementing activity-based management and addresses the issues related with its implementation is called _________________.
SYSTEMS PLANNING
29
The responsibility accounting system that focuses on organizational units such as departments and plants is called _________________________ responsibility
FINANCIAL BASED
A financial-based responsibility accounting system assigns responsibility to organizational units and expresses performance measures in financial terms.
30
The responsibility accounting system that uses both operational and financial measures is called __________________ responsibility.
ACTIVITY-BASED
31
The major source of information for the activity management system is
a. driver analysis.
b. an activity-based costing system.
c. a performance measurement system.
d. product information.
an activity-based costing system.
32
Activity-based management attempts to:
a. identify and eliminate all unnecessary activities.
b. increase the efficiency of necessary activities.
c. add new activities that increase value.
d. all of these.
all of these:
a. identify and eliminate all unnecessary activities.
b. increase the efficiency of necessary activities.
c. add new activities that increase value.
33
Processes are
a. tasks that must be completed to do work.
b. outcomes of activities.
c. activities linked to perform a specific objective.
d. the linked set of value-creating activities from disposal of materials to disposal of the finished product by end consumers.
activities linked to perform a specific objective.
34
Which of the following is NOT part of the process dimension of the activity-based management model?
a. resources
b. driver analysis
c. activities
d. performance measures
resources
Process Value Analysis (PVA) focuses on accountability for activities rather than costs. It focuses on identifying and evaluating activities, assessing why they are performed, and measuring how well they are performed.
35
Which of the following is NOT part of the two-dimensional activity-based management model?
a. personnel selection
b. driver analysis
c. resources
d. performance measures
personnel selection
36
What are the two dimensions of an activity-based management model?
a. the cost dimension and the project dimension
b. the cost dimension and the process dimension
c. the quality dimension and the process dimension
d. the quality dimension and the activity dimension
the cost dimension and the process dimension
37
Which of the following is NOT part of the cost dimension of the activity-based management model?
a. resources
b. driver analysis
c. activities
d. cost objects
driver analysis.
Driver analysis is the effort expended to identify those factors that are the root causes of activity costs.
The cost dimension provides cost information about (a) resources, (c) activities, and (d) cost objects of interest such as: products, customers, suppliers, and distribution channels.
38
Which of the following is part of the cost and process dimensions of the activity-based management model?
a. resources
b. driver analysis
c. activities
d. cost objects
activities
39
What is the purpose of driver analysis?
a. identify activities in a process
b. identify number of processes
c. identify root causes of activity costs
d. identify complexity of processes
identify root causes of activity costs
40
The results or products of an activity are called:
a. Activity inputs
b. Driver analysis
c. Activity outputs
d. Value-added activities
Activity outputs
41
The resource(s) consumed by the activity in producing its output is(are) called:
a. Value-added activities
b. Activity outputs
c. Driver analysis
d. Activity inputs
Activity inputs
42
The process of identifying, describing, and evaluating the activities an organization performs is called:
a. Activity inputs
b. Driver analysis
c. Activity analysis
d. Value-added activities
Activity analysis
43
The effort expended to identify those factors that are the root causes of activity costs is(are) called:
a. Driver analysis
b. Activity outputs
c. Activity inputs
d. Value-added activities
Driver analysis
44
An activity output measure is
a. the number of outputs from a process.
b. the cost of the activity measured.
c. the effort expended to identify root causes.
d. the number of times an activity is performed.
the number of times an activity is performed.
45
Which of the following process dimensions of the activity-based management model deals with "why"?
a. resources
b. driver analysis
c. activities
d. performance measures
driver analysis
46
Which of the following process dimensions of the activity-based management model deals with "what"?
a. resources
b. driver analysis
c. activities
d. performance measures
activities
47
Which of the following is NOT an expected outcome of activity analysis?
a. What activities are performed?
b. How many people perform the activities?
c. The time and resources required to perform the activities.
d. All of these are expected outcomes.
All of these are expected outcomes
a. What activities are performed?
b. How many people perform the activities?
c. The time and resources required to perform the activities.
48
An example of activity reduction would be
a. improving cycle time so the need for expediting is eliminated.
b. redesigning products to lead to a reduced cost set of activities.
c. designing a new product that uses components already used by another product.
d. reducing demand for customer complaint handling by improving product quality.
reducing demand for customer complaint handling by improving product quality.
49
The activities necessary to remain in business are called:
a. Value-added activities
b. Activity inputs
c. Activity outputs
d. Activity drivers
Value-added activities
50
Non-value-added activities
a. are unnecessary inputs.
b. are valued outputs to internal users.
c. are valued outputs to external users.
d. help meet the organization's needs, not the product needs.
are unnecessary inputs.
51
Which of the following is an example of a value-added activity?
a. supervision of production workers
b. inspection of products
c. scheduling of production
d. All of these are value-added activities.
supervision of production workers
52
Which of the following is NOT a necessary condition for classification as a value-added activity?
a. The activity produces no change of state.
b. The change of state was not achievable by preceding activities.
c. Activity enables other activities to be performed.
d. All of these are necessary conditions.
The activity produces no change of state.
53
Which of the following is a reason for managerial activity to be considered a value-added activity?
a. It is an enabling resource for operational activities that bring about a change of state.
b. Managing activities brings order by changing the state from uncoordinated activities to coordinated activities.
c. Both are reasons for classifying managerial activities as value-added activity.
d. Neither is a reason for classifying managerial activities as value-added activity.
Both are reasons for classifying managerial activities as value-added activity.
a. It is an enabling resource for operational activities that bring about a change of state.
b. Managing activities brings order by changing the state from uncoordinated activities to coordinated activities.
54
Which of the following is an example of a non-value-added manufacturing activity?
a. assembly
b. scheduling
c. finishing
d. All of these are value-added activities.
scheduling
55
Which of the following is a value-added activity?
a. moving
b. inspection
c. processing
d. waiting
processing
56
Which of the following process dimensions of the activity-based management model deals with "how well"?
a. resources
b. driver analysis
c. activities
d. performance measures
performance measures
57
The EFFORT to reduce costs of existing products and processes is named:
a. Activity reduction
b. Activity elimination
c. Activity selection
d. Kaizen costing
Kaizen costing
58
The process which involves choosing among various sets of activities that are caused by competing strategies.
a. Activity sharing
b. Activity selection
c. Activity elimination
d. Activity reduction
Activity selection
59
The process that focuses on non-value-added activities is called:
a. Activity sharing
b. Activity reduction
c. Activity selection
d. Activity elimination
Activity elimination
60
The process that decreases the time and resources required by different activities is called:
a. Activity sharing
b. Activity elimination
c. Activity reduction
d. Activity selection
Activity reduction
61
The process which increases the efficiency of necessary activities by using economies of scale is called:
a. Activity elimination
b. Activity sharing
c. Activity selection
d. Activity reduction
Activity sharing
62
Which of the following focuses on the relationship of activity outputs to activity inputs?
a. activity reduction
b. quality
c. time
d. efficiency
efficiency
63
Which of the following is a financial measure of activity efficiency?
a. activity flexible budgeting
b. trends in activity costs
c. benchmarking
d. all of these
all of these
a. activity flexible budgeting
b. trends in activity costs
c. benchmarking
64
For non-value-added activities that are unnecessary, the standard quantity is
a. one.
b. zero.
c. actual quantity minus standard price.
d. actual quantity plus standard price.
zero.
65
Value-added costs are standard costs based on
a. currently attainable standards.
b. ideal usage standards.
c. cycle time.
d. the value added.
ideal usage standards.
66
Value-added costs equal standard quantity times
a. non-value-added costs.
b. currently attainable standards.
c. standard price.
d. actual price.
standard price
67
The purpose of trend reporting on non-value-added costs is to
a. trace resources to cost objectives.
b. assess value content.
c. define root causes.
d. see if cost reductions occurred as expected.
see if cost reductions occurred as expected.
68
Controlling the cost reduction process using Kaizen costing is accomplished
a. through repetition of subcycle processes.
b. by punishment of those not reaching the Kaizen standard.
c. through one-time adjustments.
d. through reviews every four to five years.
through repetition of subcycle processes.
69
The continuous improvement subcycle of Kaizen costing is defined by what sequence?
a. check-do-plan-act
b. do-check-plan-act
c. plan-do-check-act
d. None of these is the correct sequence.
plan-do-check-act
70
The maintenance subcycle is defined by what sequence?
a. establish-do-check-act
b. establish-act-do-check
c. do-act-establish-check
d. check-do-plan-act
establish-do-check-act
71
A technique for improving performance of activities and processes that searches for best practices is called
a. value-added reporting.
b. Kaizen costing.
c. trend reporting.
d. benchmarking.
benchmarking.
72
When different units that perform the same types of activities within the same organization are compared to the unit with the best performance, this practice is called
a. variance benchmarking.
b. competitive benchmarking.
c. external benchmarking.
d. internal benchmarking.
internal benchmarking.
73
A technique for improving performance of activities and processes that predicts activity costs as activity output changes is called
a. value-added reporting.
b. activity flexible budgeting.
c. Kaizen costing.
d. benchmarking.
activity flexible budgeting.
74
The capacity variance is composed of the unused capacity variance and
a. the activity volume variance.
b. the used capacity variance.
c. the activity benchmark.
d. the value-added standard.
the activity volume variance.
75
The unused capacity variance is
a. the difference in costs between activity availability and activity usage.
b. the difference in costs between actual activity level acquired and the value-added standard quantity of activity that should have been used.
c. the difference in costs between practical capacity of activity and the standard capacity of the activity.
d. none of these.
the difference in costs between activity availability and activity usage.
76
A technique for improving performance of activities and processes that compares the number of times an activity can be performed to the number actually performed is called
a. value-added activity reporting.
b. activity flexible budgeting.
c. activity capacity reporting.
d. activity trend reporting.
activity capacity reporting.
77
Under what conditions would the activity capacity used be zero?
a. If the activity is value-added.
b. If the activity is non-value-added.
c. If the activity is discretionary.
d. It would never be set at zero.
If the activity is non-value-added.
78
Activity-based management can be viewed as an information system with broad objectives. Which of the following is NOT on of the broad objectives of ABM?
a. Support continuous improvement through cost reduction.
b. Increase the non-value-added costs through increased collection of more accurate cost accounting information.
c. Improve decision making through more accurate cost data.
d. All of these are broad objectives of ABM.
Increase the non-value-added costs through increased collection of more accurate cost accounting information.
79
Which of the following is NOT an objective of activity-based management?
a. to improve decision making through better cost information
b. to increase the number of activities necessary to perform processes
c. to encourage cost reduction through continuous improvement
d. to increase profitability
to increase the number of activities necessary to perform processes
80
Which of the following is NOT a reason for ABM implementation failure?
a. lack of support from higher-level managers
b. expected results do not materialize
c. implementation is performed in a timely fashion
d. resistance to change
implementation is performed in a timely fashion
81
Which of the following is NOT an objective of responsibility accounting?
a. to redesign processes to be more effective
b. to align individual and organizational goals
c. to influence behavior
d. to increase profitability
to redesign processes to be more effective
82
Which of the following is NOT a common step in an ABM implementation model?
a. Systems planning
b. Assess Value Content of Activities
c. Identify, Define, and Classify Activities
d. All of these are common steps.
Assess Value Content of Activities
83
Which of the following is NOT an essential element of responsibility accounting?
a. assigning responsibility
b. establishing performance measures
c. evaluating performance
d. ridiculing poor performers
ridiculing poor performers
84
The responsibility accounting system developed for operations in a continuous improvement environment would be
a. financial-based responsibility accounting.
b. functional-based responsibility accounting.
c. activity-based responsibility accounting.
d. strategy-based responsibility accounting.
activity-based responsibility accounting.
85
Which of the following is descriptive of activity-based responsibility accounting?
a. It assumes that activities can be collected into independent subgroups.
b. Its focus is the organization.
c. It assigns responsibility to processes.
d. Its standards are engineered and tend to be static.
Its focus is the organization.
86
Which of the following is descriptive of financial-based responsibility accounting?
a. It assumes that activities are linked.
b. It assigns responsibility to organization units.
c. Its control emphasis is costs.
d. Its goal is continuous improvement.
It assigns responsibility to organization units.
87
Which of the following is NOT a necessary essential element of activity-based responsibility accounting?
a. Process management requires significant group activity.
b. Performance evaluation employs dynamic standards.
c. Performance evaluation uses only financial measures.
d. Performance evaluation is based on optimal standards.
Performance evaluation uses only financial measures.
88
The process which refers to the performance of a process in a NEW WAY to achieve major improvements is called:
a. Process improvement
b. Process creation
c. Process innovation
d. Process efficiency
Process innovation
89
Process improvement can be defined as
a. The performance of a process to achieve major improvements.
b. The adoption of new processes to meet strategic objectives.
c. The incremental or continual increases in the efficiency of a process.
d. The expression of performance measures in financial terms.
The incremental or continual increases in the efficiency of a process.
90
The process which refers to incremental or continual increases in the efficiency of an existing product is called:
a. Process elimination
b. Process innovation
c. Process creation
d. Process improvement
Process improvement
91
The process which refers to the adoption of new processes to meet strategic objectives is called:
a. Process creation
b. Process innovation
c. Process improvement
d. Process efficiency
Process creation
92
Which of the following is NOT true about assigning rewards in activity-based responsibility accounting?
a. Rewards are assigned based on budgetary standards.
b. Rewards are assigned based on individual as well as team performance.
c. Rewards are assigned based on progress towards optimal standards.
d. Rewards include bonuses, profit sharing, and gainsharing.
Rewards are assigned based on budgetary standards.
93
The term(s )which refer(s) to a global incentive that encourages employees to contribute to the overall financial well-being is(are) called
a. Bonuses
b. Demotion
c. Profit sharing
d. Gain sharing
Profit sharing
94
The term(s) which refer(s) to an incentive that specifically relates to sharing the gains from improvements in projects is(are) called
a. Bonuses
b. Gain sharing
c. Profit sharing
d. Stock options
Gain sharing
95
The following is(are) awards made when performance is maintained or exceeds a specific measure:
a. Profit sharing
b. Stock options
c. Bonuses
d. Gain sharing
Bonuses
