CCA Strategic Management Accounting 2

Question 1

Customer profitability analysis is primarily used to:

Accepted Answer

Identify which customers contribute most to overall company profitability

Answer

Customer profitability analysis allocates revenues and costs to individual customers or segments to reveal which relationships are most (or least) profitable.

Question 2

Life cycle costing differs from period-based costing because it considers costs:

Accepted Answer

From initial design through end-of-life disposal

Answer

Life cycle costing captures all costs incurred across a product's entire life — R&D, production, marketing, after-sales service, and disposal.

Question 3

Kaizen costing is best characterized as:

Accepted Answer

Applying continuous incremental improvements to reduce costs during production

Answer

Kaizen costing focuses on achieving small, ongoing cost reductions throughout the manufacturing process after a product has been launched.

Question 4

The arm's-length principle in transfer pricing strategy requires that:

Accepted Answer

Transactions between related parties be priced as if conducted between independent parties

Answer

The arm's-length principle, endorsed by the OECD, mandates that intercompany prices reflect what unrelated parties would agree to in comparable circumstances.

Question 5

Economic Value Added (EVA) is calculated as:

Accepted Answer

Net Operating Profit After Tax minus (Invested Capital multiplied by WACC)

Answer

EVA measures wealth creation by subtracting the cost of all capital employed (equity and debt) from after-tax operating profit.

(CCA) Certified Corporate Accountant Practice Test

(CCA) Certified Corporate Accountant Practice Test

CCA Strategic Management Accounting 2