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Accounting for Decision Making and Control Jerald Zimmerman 10th Edition - Test Bank
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Chapter 05 Test Bank – Static Key Multiple Choice Questions 1. Each of the following responsibility centers and decision rights are correctly matched, except: A. Cost center—input mix B. Investment center—capital invested C. Profit center—capital invested D. Investment cen...

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  • August 17, 2023
  • 347
  • 2022/2023
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Chapter 01 Test Bank – Static Key
Multiple Choice Questions

1. The firm's information system:

A. is always a single integrated system
B. includes only financial information
C. may include other information such as customer satisfaction surveys, in addition to financial information
D. is less important as a firm grows in size
E. none of the above

The firm's information system includes many kinds of financial and non-financial information.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Leveraging Technology
Blooms: Remember
Difficulty: 1 Easy
Topic: Managerial Accounting: Decision Making and Control

2. Identify all the correct statements:

A. Managers naturally seek to maximize shareholders' wealth
B. Managers act in their own interests, and so there is no way to align their interests with those of the owners
C. To motivate managers in non-profit firms, no employee incentives are needed
D. To align the interests of managers and owners, owners must design systems to monitor and reward management behavior that
increases the firm's profits
E. none of the above

To minimize conflicts between the economic interests of managers and owners, the owners need both systems to monitor the
manager's performance and systems of rewards or incentives.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
AICPA: FN Risk Analysis
Blooms: Remember
Difficulty: 1 Easy
Topic: Management Accountant's Role in the Organization
Topic: Managerial Accounting: Decision Making and Control




1-1
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

,3. An internal accounting system should:

A. provide information to enable costs to be minimized
B. provide financial accounting data for external reporting purposes
C. provide management accounting information for decision-making
D. provide data for tax purposes
E. all of the above

A well designed internal accounting system should provide data for external purposes, such as financial reporting and tax, as
well as internal purposes such as cost control, assessing performance and determining rewards. It is economically inefficient to
maintain multiple accounting systems.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Remember
Difficulty: 1 Easy
Topic: Design and Use of Cost Systems

4. Economic Darwinism:

A. explains why firms persist in inefficient behavior
B. explains why some inefficient accounting practices persist
C. explains why marmots eat bears
D. explains why bears eat marmots
E. none of the above

Inefficient accounting systems may continue to exist either because they have proved better than other systems or because better
systems have not been yet discovered.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Marketing
AICPA: FN Risk Analysis
Blooms: Remember
Difficulty: 1 Easy
Topic: Marmots and Grizzly Bears




1-2
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

,5. Management accountants mainly are:

A. Internal consultants
B. Scorekeepers
C. Focused on calculating product costs
D. Corporate cops
E. Internal consultants and corporate cops.

While score-keeping and product costing are tasks performed by today's management accountants, these usually are considered
minor. The major roles they perform are internal consultant in terms of providing information to aid other's decision making and
corporate cop in terms of providing control systems to prevent fraud and performance measures for incentive systems.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 2 Medium
Topic: Management Accountant's Role in the Organization

6. Internal control systems:

A. are the responsibility of the external auditor
B. include anti-fraud measures
C. are designed to allow financial misrepresentation
D. require that one person perform all aspects of a task
E. all of the above

The internal control system is designed to safeguard assets, protect the integrity of the accounting information system, and to
prevent fraud. A key practice is the separation of duties to ensure that critical tasks are performed by two or more people.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 2 Medium
Topic: Management Accountant's Role in the Organization




1-3
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

, 7. Performance measures:

A. are critical in designing a reward system
B. are unimportant in designing a reward system
C. always influence people to achieve them
D. are always worded vaguely
E. are not needed to provide incentives because employees always want to do the right thing

Performance measures are critical in designing a reward system. If poorly specified, they may promote dysfunctional behavior or
encourage managers to undertake actions not in the best interest of the organization. If managers' performance is not measured
and not rewarded, it is unlikely that managers will focus on enhancing the owner's wealth.
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Decision Making
Blooms: Understand
Difficulty: 2 Medium
Topic: Evolution of Management Accounting: A Framework for Change

8. Micro Enterprises has the capacity to produce 10,000 widgets a month, and currently makes and sells 9,000 widgets a month.
Widgets normally sell for $6 each, and cost an average of $5 to make, including fixed costs. The monthly fixed costs are
$18,000. Coyote Corp. has offered to buy 1,000 widgets at $4 each.
What is the "cost" per unit in the context of evaluating the offer from Coyote Corp.?

A. $2
B. $3
C. $4
D. $5
E. $6

The "cost" per unit in this case is the variable cost that must be covered. Since Micro has excess capacity, the only cost the firm
incurs to produce an additional 1,000 widgets is the variable cost. The average cost of $5 includes the fixed cost per widgets of
$2 ($18,000/9000 widgets). Hence, the variable cost per widget is just the average cost of $5 less the fixed cost per widget of $2,
or $3.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Accessibility: Screen Reader Compatible
AICPA: BB Industry
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Topic: Vortec Medical Probe Example




1-4
Copyright © 2019 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.

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