1.4   Describe key guidelines management accountants follow and roles they assume to support management decisions.


1) As users of the information produced by management accounting systems, managers are forced to understand the design and operation of these systems.


2) The cost-benefit approach should be used to make resource allocation decisions.


3) Line management exists to provide advice and assistance to staff departments.


4) The controller is also called the CFO.


5) Line management is directly responsible for attaining the goals of the organization.


6) A cost concept used for external reporting purposes may not be appropriate for internal, routine reporting to managers.

7) The method recommended for a management accountant in dealing with a resource-allocation decision is

A) management by exception.

B) total value chain analysis.

C) analysis based on feedback.

D) the variance analysis approach.

E) the cost-benefit approach.


8) The primary criterion when faced with a resource allocation decision is

A) cost minimization.

B) reduction in the amount of time required to perform a particular job.

C) achievement of organizational goals.

D) how well the alternative options help achieve organizational goals in relation to the costs incurred.

E) improving information flow.


9) Which of the following statements about the cost-benefit approach is true?

A) Resources should be spent if they are expected to better attain company goals in relation to the expected costs of these resources.

B) In a cost-benefit analysis, both costs and benefits are easy to obtain.

C) Resources should be spent if the costs of a decision outweigh the benefits of the decision.

D) A cost-benefit approach would not be appropriate for a decision to install a budget system or not.

E) The cost-benefit approach is more important than behavioural considerations.


10) An example of a staff management function would be

A) determining that new equipment is required.

B) preparing operating cost estimates for proposed new equipment.

C) developing quality standards for production.

D) ensuring that environmental standards are met.

E) being responsible for attaining a set level of plant income.



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