Strategic Management Accounting Flashcards

The Balanced Scorecard, developed by Kaplan and Norton, measures organizational performance across how many distinct perspectives?

Answer: Four

The Balanced Scorecard uses four perspectives: Financial, Customer, Internal Business Processes, and Learning & Growth.

Which strategic cost analysis tool examines the full series of value-creating activities from raw materials through final delivery to the customer?

Answer: Value chain analysis

Value chain analysis, introduced by Michael Porter, maps every activity that adds value from supplier inputs to end-customer delivery.

Target costing is most accurately calculated as:

Answer: Market price minus desired profit margin

Target cost equals the competitive market price minus the profit margin management requires, establishing a cost ceiling for the product.

In strategic management accounting, benchmarking is best described as:

Answer: Comparing performance metrics against best-in-class organizations

Benchmarking identifies performance gaps by comparing an organization's processes and results against industry leaders or best-practice peers.

A 'cost driver' in activity-based management is defined as:

Answer: A factor that causes the cost of an activity to change

A cost driver is any factor whose change causes a corresponding change in the total cost of a related activity.

Throughput accounting measures organizational performance primarily by focusing on:

Answer: The rate at which the system generates money through sales

Throughput accounting, based on the Theory of Constraints, prioritizes maximizing throughput (sales minus truly variable costs) over managing cost allocations.

Strategic management accounting differs from traditional management accounting primarily because it:

Answer: Incorporates external market, competitor, and environmental information

Strategic management accounting extends beyond internal data by integrating competitor intelligence, market trends, and environmental factors into financial analysis.