CHAPTER 8 - TRUE / FALSE

Question 1

Activity based management focuses management’s attention on activities resulting in improving customer value and profits.

Answer 1

True

Question 2

Activity-based costing does not provide good information for activity-based management.

Answer 2

False

Question 3

Activity-based costing is very concerned with waste issues.

Answer 3

False

Question 4

The activity-based management model has two dimensions: a cost dimension and a process dimension.

Answer 4

True

Question 5

Process value analysis maximizes systemwide performance by emphasizing activity management.

Answer 5

True

Question 6

Process value consists of three elements: driver analysis, activity analysis, and performance measurement.

Answer 6

True

Question 7

Driver analysis identifies performance levels.

Answer 7

False

Question 8

Performance measurement is concerned with how well activities are performed.

Answer 8

True

Question 9

Financial measures of performance focus on the dollar effect of activity performance changes

Answer 9

True

Question 10

Reducing non-value added costs decreases activity deficiency.

Answer 10

False

Question 11

Cost reduction is a measure of activity improvement.

Answer 11

True

Question 12

Kaizen costing is concerned with reducing the costs by identifying small, continuous improvement for existing products and processes.

Answer 12

True

Question 13

Implementing an activity-based management requires careful planning and execution.

Answer 13

True

Question 14

Identifying, defining, and classifying activities require more attention for ABC than ABM.

Answer 14

False

Question 15

One of the major reasons for the failure of ABM is lack of upper management support.

Answer 15

True

Question 16

The common steps in implementing activity-based management are systems planning and activity identification, definition, and classification.

Answer 16

True

Question 17

A financial-based responsibility accounting system focuses on the assignment of responsibility to organizational units and measures performance in financial terms.

Answer 17

True

Question 18

Activity-based responsibility accounting assigns responsibility to processes and uses only nonfinancial measures of performance.

Answer 18

False

Question 19

Financial-based responsibility accounting focuses on functional organizational units.

Answer 19

True

Question 20

Process improvement refers to incremental and erratic increases in the efficiency of an existing process.

Answer 20

False