Assignment:
Q1. How are organizational strategies related to core competencies?
a) Competencies are the tactics managers use to take advantage of strategies
b) Competencies and strategies are an integral part of organizational vision
c) Strategies help managers exploit competencies
d) Strategies and competencies are actually two ways of expressing the same idea
Q2. Organizational strategies:
a) Are reconsidered on a daily basis
b) Should never be reconsidered once they are determined
c) Are reconsidered quarterly
d) Are reconsidered periodically in response to changes in the organization or environment
Q3. Which of the following is an element of an operating plan?
a) Developing an organizational mission
b) Preparing financial statements
c) Defining core values
d) Budgeting employee costs
Q4. Jane is considering opening her own business, now that she has retired from her regular job. Her business idea is a reminder and shopping service, in which clients submit lists of birthdays, anniversaries and other important dates. Jane sends her clients reminders for those dates, and shops for special gifts at the client’s request. She plans to do all of the work herself rather than hiring and managing additional employees. “Providing excellent, reliable customer service at reasonable prices” best describes which of the following for Jane’s business?
a) Core competency
b) Vision
c) Operating plan
d) Actual operations
Q5. Jane is considering opening her own business, now that she has retired from her regular job. Her business idea is a reminder and shopping service, in which clients submit lists of birthdays, anniversaries and other important dates. Jane sends her clients reminders for those dates, and shops for special gifts at the client’s request. She plans to do all of the work herself rather than hiring and managing additional employees. Jane’s core competencies are most likely to include:
a) An annual budget
b) The ability to deduct business expenses on her tax return
c) The first year’s actual results
d) Her knowledge of potential gifts and the local shops
Q6. Mixed costs:
a) Vary with production in direct proportion to volume
b) Vary with production but not in direct proportion to volume
c) Do not vary with production
d) Include only different types of fixed costs
Q7. The relevant range is defined as:
a) The period of time over which costs do not change
b) The volume of production over which the cost assumptions hold
c) The volume of production over which step-wise fixed costs increase
d) The time period in which the level of production does not change
Q8. Which of the following is not an assumption when estimating a cost function over the relevant range of activity?
a) Mixed costs will change in total
b) Mixed costs will change per unit
c) Variable costs will be constant in total
d) Fixed costs will be constant in total.
Q9. Paula’s Kennels is located in a small city in Nova Scotia. The company employs three pet attendants, four pet groomers, and two front office staff who book appointments and keep records. The Kennel provides a range of services for dogs and cats including boarding, grooming, and obedience training. The grooming area includes a small retail section that carries dog and cat food, pet supplies, and toys. If the cost object is cost per day of boarding, which of the following is a direct cost?
a) Pet food
b) Front office staff salaries
c) Grooming supplies
d) Depreciation on shelving and equipment used in the grooming and retail area
Q10. Fixed costs per unit:
a) Vary inversely with changes in volume
b) Change regardless of changes in volume
c) Will not change over the relevant range
d) Increase with an increase in volume
Q11. Mixed costs:
a) Consist of fixed and variable costs
b) Are constant in total
c) Consist of the variable portion of all costs
d) Have a constant per-unit value
Q12. CVP analysis is most likely to be used for which of the following decisions?
a) The amount of discretionary expenditures for the next period
b) The organizational vision
c) The exact level of operations at which the organization will operate
d) Whether to buy a business segment operating in Germany
Q13. Which of the following techniques examine changes in profits in response to changes in volume, costs, and prices?
a) Activity-based costing
b) Financial statement analysis
c) Cost-volume-profit analysis
d) Balanced scorecard
Q14. CVP analysis can be used to make decisions about discretionary expenditures, such as:
a) Advertising
b) Taxes
c) Direct materials purchases
d) City license fees
Q15. When the cost object is a unit produced, lubricating oil for production machines would be a(n):
a) Direct cost
b) Indirect cost
c) Sunk cost
d) Opportunity cost
Q16. The margin of safety is:
a) The difference between estimated sales and breakeven sales.
b) Not a useful measure for management in understanding the risk associated with a product line.
c) The amount sales can drop before the target profit is met.
d) How far sales must increase to earn a profit.
Q17. Which of the following is the amount by which sales could drop before profits reach the breakeven point?
a) Operating leverage b) Total contribution margin c) Margin of safety d) Incremental sales
Q18. The ratio of contribution margin ? profit is used to compute a company’s:
a) Expected fixed costs
b) Degree of operating leverage
c) Margin of safety
d) Margin of safety percentage
Q19. What is the relationship between the margin of safety percentage and the degree of operating leverage?
a) They are unrelated
b) They are always the same
c) They are reciprocals
d) They are both subject to management bias
Q20. At the breakeven point:
a) Sales will be equal to variable costs plus target profit
b) Sales will be equal to variable costs plus fixed costs
c) Sales will be equal to fixed costs plus target profit
d) Fixed costs will be equal to variable costs