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Chapter 02 - Answer
Chapter 02 - Answer
CHAPTER 2
MANAGEMENT ACCOUNTING
AND THE BUSINESS ENVIRONMENT
I. Questions
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Chapter 2 Management Accounting and the Business Environment
7. If customers who provide a company with the most profits are attracted,
satisfied, and retained, profits will increase as a result.
Quality: Customers are expecting higher levels of quality and are less
tolerant of low quality than in the past.
Time: Time has many components: the time taken to develop and
bring new products to market; the speed at which an
organization responds to customer requests; and the reliability
with which promised delivery dates are met. Organizations
are under pressure to complete activities faster and to meet
promised delivery dates more reliably than in the past in order
to increase customer satisfaction.
Innovation: There is now heightened recognition that a continuing flow of
innovative products or services is a prerequisite for the
ongoing success of most organizations.
various alternative ways of achieving those goals, and then deciding how
to attain the desired goals. Control decisions include taking actions to
implement the planning decisions and deciding on performance evaluation
and feedback that will help future decision making.
11. Four themes for managers to attain success are customer focus, value-
chain and supply-chain analysis, key success factors, and continuous
improvement and benchmarking.
13. This phrase means that people will direct their attention to work primarily
on those tasks that management monitors and measures. Employees may
not pay as much attention (or no attention) to tasks that are not measured.
Often management will reward people based on how well they perform
relative to a specific measure. As an example, in a manufacturing
organization, if people are measured and rewarded based on the number of
outputs per hour, regardless of quality, employees will focus their
attention on producing as many units of output as possible. A negative
consequence is that the quality of output may suffer.
14. Some of these new measures are quality, speed to market, cycle time,
flexibility, complexity and productivity.
16.
Stakeholders Contribution Requirements
Employees Effort, skills, Rewards, interesting
information jobs, economic
security, proper
treatment
Partners Goods, services, Financial rewards
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Chapter 2 Management Accounting and the Business Environment
19. Just-in-time means making a good or service only when the customer,
internal or external, requires it. Just-in-time requires a product layout
with a continuous flow (no delays) once production starts. It means that
setup costs must be reduced substantially to eliminate the need to produce
in batches, and it means that processing systems must be reliable. Just-in-
time production is based on the elimination of all nonvalue-added
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Management Accounting and the Business Environment Chapter 2
1. B 11. A 21. B
2. A 12. B 22. C
3. D 13. C 23. C
4. A 14. D
5. D 15. A
6. A 16. A
7. C 17. B
8. B 18. C
9. D 19. B
10. B 20. A
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