CCA Strategic Management Accounting 1 — Questions and Answers
Question 1: The Balanced Scorecard, developed by Kaplan and Norton, measures organizational performance across how many distinct perspectives?
- Two
- Three
- Four (Correct answer)
- Five
Correct answer: Four
The Balanced Scorecard uses four perspectives: Financial, Customer, Internal Business Processes, and Learning & Growth.
Question 2: Which strategic cost analysis tool examines the full series of value-creating activities from raw materials through final delivery to the customer?
- Activity-based costing
- Value chain analysis (Correct answer)
- Life cycle costing
- Target costing
Correct answer: Value chain analysis
Value chain analysis, introduced by Michael Porter, maps every activity that adds value from supplier inputs to end-customer delivery.
Question 3: Target costing is most accurately calculated as:
- Cost plus desired profit margin
- Market price minus desired profit margin (Correct answer)
- Standard cost plus favorable variance
- Total fixed cost divided by units produced
Correct 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.
Question 4: In strategic management accounting, benchmarking is best described as:
- Setting financial targets based solely on historical data
- Comparing performance metrics against best-in-class organizations (Correct answer)
- Calculating cost variances from standard cost cards
- Allocating overhead costs using activity cost drivers
Correct 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.
Question 5: A 'cost driver' in activity-based management is defined as:
- A factor that causes the cost of an activity to change (Correct answer)
- The total overhead allocated to a product line
- The fixed cost absorbed per unit produced
- The variable cost rate for direct materials
Correct 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.
Question 6: Throughput accounting measures organizational performance primarily by focusing on:
- The rate at which overhead costs are absorbed
- The rate at which the system generates money through sales (Correct answer)
- The percentage reduction in direct labor costs
- The variance between budgeted and actual contribution margin
Correct 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.
Question 7: Strategic management accounting differs from traditional management accounting primarily because it:
- Relies exclusively on historical cost data
- Focuses only on internal operational data
- Incorporates external market, competitor, and environmental information (Correct answer)
- Eliminates variance analysis entirely
Correct 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.
CCA Strategic Management Accounting 1
The Balanced Scorecard, developed by Kaplan and Norton, measures organizational performance across how many distinct perspectives?