CPA Program — Strategic Management Accounting

Strategic management accounting is best described as an approach that:

• AProvides forward-looking, externally-oriented information that supports the formulation a…
• BRecords only historical financial transactions for statutory reporting
• CFocuses exclusively on product costing for inventory valuation under accounting standards
• DReplaces financial accounting in preparing the annual report

Under the Global Management Accounting Principles, which principle is concerned with ensuring that information used in decision-making is relevant?

• ACommunication provides insight that is influential
• BInformation is relevant
• CAnalysis of impact on value
• DStewardship builds trust

A management accountant increasingly acts as a 'business partner'. This role is BEST characterised by:

• AWorking in isolation to produce monthly variance reports after period end
• BRestricting activity to external audit liaison
• CEmbedding within operational teams to provide real-time analysis and challenge business d…
• DPreparing only the statutory financial statements

Porter's three generic strategies are cost leadership, differentiation and:

• ADiversification
• BVertical integration
• CMarket penetration
• DFocus

When facing an ethical dilemma at work, APES 110 (the Code of Ethics for Professional Accountants) requires a member to apply which of the following fundamental principles?

• AIntegrity, objectivity, professional competence and due care, confidentiality, and profes…
• BProfit maximisation, secrecy and loyalty
• CAggressive tax minimisation and client advocacy
• DShareholder primacy above all stakeholders

A SWOT analysis classifies which of the following as an external factor?

• AA skilled and motivated workforce
• BAn emerging competitor entering the market
• CAn outdated internal IT system
• DA strong brand reputation owned by the firm

The PESTEL framework is used by a management accountant to analyse:

• AThe internal cost structure of a single product
• BThe break-even point of a division
• CThe macro-environmental factors affecting an organisation
• DThe depreciation policy for non-current assets

Which statement best reflects how digital technologies such as data analytics and automation are changing the management accountant's role?

• AThey eliminate the need for any human judgement in finance
• BThey make management accounting obsolete
• CThey restrict accountants to manual data entry
• DThey free accountants from routine processing, increasing emphasis on interpretation, ins…

Value creation, as discussed in strategic management accounting, primarily concerns:

• AGenerating returns above the cost of capital while considering financial and non-financia…
• BMaximising short-term reported profit regardless of resource use
• CMinimising disclosure to shareholders
• DIncreasing the volume of journal entries processed

Mintzberg distinguished between deliberate and emergent strategy. An emergent strategy is one that:

• AIs fully planned in advance and executed exactly as intended
• BArises from patterns in decisions and actions over time, even without a formal plan
• CIs imposed solely by external regulators
• DRelates only to financial reporting choices

The data-information-knowledge-wisdom hierarchy implies that, to be useful for decision-making, raw data must first be:

• ADeleted to save storage
• BKept exactly as captured with no transformation
• CProcessed and given context to become information
• DReported only to external auditors

A relevant cost for a decision is one that is:

• AA sunk cost already incurred
• BAn allocated head-office overhead that does not change
• CA non-cash book depreciation charge
• DA future cash flow that differs between the alternatives being considered

A company can make a component internally for $18 per unit (including $4 of fixed overhead that is unavoidable) or buy it externally for $16 per unit. On a relevant-cost basis, the company should:

• AMake internally because the relevant make cost is $14, which is below the $16 buy price
• BBuy externally because $16 is less than $18
• CBe indifferent because both options cost the same
• DBuy externally because fixed overhead is always relevant

An opportunity cost is best defined as:

• AThe recorded historical cost of an asset
• BThe benefit forgone from the next best alternative use of a resource
• CA cash payment made to a supplier
• DThe total fixed cost of a department

A product sells for $50, has variable costs of $30, and the firm faces a labour constraint where each unit needs 2 labour hours. The contribution per limiting factor (per labour hour) is:

• A$20
• B$40
• C$10
• D$15

Activity-based costing (ABC) improves on traditional overhead absorption by:

• AAllocating all overhead using a single plant-wide labour-hour rate
• BIgnoring overhead entirely
• CCharging overhead only to direct materials
• DTracing overhead to products using multiple cost drivers that reflect the activities cons…

In an ABC system, a 'cost driver' is:

• AA factor that causes the cost of an activity to change
• BThe total fixed cost of the factory
• CThe selling price of the product
• DThe depreciation method used for machinery

Customer profitability analysis may reveal that a high-revenue customer is unprofitable because:

• AThe customer always pays in advance
• BThe cost to serve (frequent small orders, returns, special handling) exceeds the margin g…
• CThe customer buys only the highest-margin products
• DThe customer requires no after-sales support

A special order should generally be accepted, on a relevant-cost basis, when:

• AThe offered price exceeds the full absorption cost in all cases
• BIt would displace regular sales at a higher contribution
• CThere is spare capacity and the price exceeds the incremental (relevant) cost of fulfilli…
• DIt increases reported revenue regardless of cost