Assignment Questions
on
5202: Strategic Management Accounting
Chapter 1: Introduction
1. What is strategy? Give a simple example of how a company’s strategy might affect its plans.
2. What are the three main types of strategies a company can have? Give an example of each.
3. What is Strategic Cost Management (SCM)? How is it different from regular cost accounting?
4. Name and briefly describe the three main tools used in Strategic Cost Management.
5. What is Strategic Management Accounting (SMA)? Why was it developed?
6. Distinguish between SMA and traditional management accounting? Give two key differences.
7. Why did traditional management accounting become less useful in the 1980s?
8. What is value chain analysis? Why is it important for strategic decision-making?
Chapter 2: Relevance Costing
1. Define relevant costs and explain why sunk costs are excluded from decision-making
analysis.
2. Distinguish between opportunity and notional costs with examples from a manufacturing
context.
3. Explain the concept of differential/incremental costs and their role in make-or-buy decisions.
4. How do opportunity costs influence special order pricing decisions?
5. Explain why allocated fixed overhead costs are often irrelevant in short-term decision
making.
6. How does the concept of relevant costing apply to product line discontinuation decisions?
7. "All variable costs are relevant, all fixed costs are irrelevant." Critically evaluate this
statement.
8. Describe the relevance of joint costs in sell-or-process-further decisions.
9. How does the time horizon of a decision affects which costs are considered relevant?
Chapter 3: Value Chain Costing
1. Define Porter's value chain and explain its primary and support activities.
2. How does value chain costing differ from traditional cost accounting systems?
3. Explain how value chain analysis can reveal opportunities for competitive advantage.
4. How can activity-based costing (ABC) be integrated with value chain analysis?
5. Discuss the role of value chain costing in outsourcing and vertical integration decisions.
6. Explain how value chain analysis can be used to identify cost drivers at each activity stage.
7. Discuss the challenges of implementing value chain costing in service organizations.
Chapter 4: Integrated Performance Measurement and Balanced Scorecard
1. Explain the four perspectives of the Balanced Scorecard and their interrelationships.
2. How does the Balanced Scorecard translate organizational strategy into measurable
objectives?
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3. Describe the process of creating a strategy map for a Balanced Scorecard implementation.
4. How should organizations select appropriate Key Performance Indicators (KPIs) for their
BSC?
5. Discuss the role of the BSC in aligning individual performance with organizational strategy.
6. Explain how the BSC addresses the limitations of traditional financial performance measures.
7. What challenges do organizations face when implementing a Balanced Scorecard?
8. How can the BSC be customized for different industries or organizational types?
9. Describe the key components of an effective integrated performance measurement system.
10. Explain how the Performance Prism framework extends beyond the Balanced Scorecard.
11. Discuss the role of benchmarking in integrated performance measurement.
Chapter 5: Quality Costing
1. Define and provide examples of the four categories of quality costs.
2. Explain the traditional trade-off model between prevention/appraisal costs and failure costs.
3. How do Total Quality Management (TQM) principles influence quality costing approaches?
4. Compare and contrast the quality costing approaches in manufacturing versus service firms.
5. Explain how Six Sigma methodologies affect the measurement and reduction of quality costs.
6. Discuss the role of quality cost reporting in continuous improvement initiatives.
7. Explain the relationship between ISO 9000 certification and quality costing systems.
8. How should quality cost information be integrated into strategic decision-making processes?
9. Discuss the limitations of traditional quality costing models in today's business environment.
Chapter 6: Transfer Pricing
1. Define transfer pricing and explain its importance in decentralized organizations.
2. Compare and contrast the three main transfer pricing methods.
3. Explain the "arm's length principle" as defined by OECD guidelines.
4. How do transfer pricing systems affect divisional autonomy and managerial motivation?
5. Discuss the tax implications of transfer pricing in multinational corporations.
6. Explain how capacity utilization affects transfer pricing decisions.
7. How should transfer prices be set when no external market exists for the intermediate
product?
8. Discuss the role of Advance Pricing Agreements (APAs) in managing transfer pricing risks.
Others: Short Notes
1. ABC (Activity-Based Costing) 12. ISO 9000
2. BSC (Balanced Scorecard) 13. Six Sigma
3. COQ (Cost of Quality) 14. PDCA (Plan-Do-Check-Act)
4. TQM (Total Quality Management) 15. CVP (Cost-Volume-Profit)
5. EVA (Economic Value Added) 16. ROI (Return on Investment)
6. KPI (Key Performance Indicator) 17. CSF (Critical Success Factors)
7. Sunk Cost 18. JIT (Just-In-Time)
8. Opportunity Cost 19. MNC (Multinational Corporation)
9. Transfer Pricing (TP) 20. OECD (Organization for Economic
10. ALP (Arm's Length Principle) Co-operation and Development)
11. Value Chain Analysis (VCA)
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