Certified Management Accountant: CMA

A service firm may improve productivity by

A. Creating a product that reduces the need for a service

B. Increasing the quality of a given quantity of service

C. Avoiding the trap of treating the service as a manufacturing process

D. Performing more tasks using highly trained employees

Best Computers believes that its collection costs could be reduced through modification of collection procedures. This action is expected to result in a lengthening of the average collection period from 30 to 35 days; however, there will be no change in uncollectible accounts, or in total credit sales. Furthermore, the variable cost ratio is 60%, the opportunely cost of a longer collection period is assumed to be negligible, the compass budgeted credit sales for the coming year are $45,000 000, and the required rate of return is 6%. To just changes in collection procedures, the minimum annual reduction of costs (using a 360-day year and ignoring taxes) must be

A. $375000

B. $37,500

C. $125,000

D. $22,500

Okra, Inc. has been experiencing sales difficulties over the last two years. Management has identified the problem: poor customer service and lack of internal coordination among the marketing department, the production department, and the finance department. In making a decision to solve the problem, management took the following logical steps (not necessarily in this order):

1.

Concluded that extensive training would improve performance and efficiency of all the involved departments; replacing the head of the marketing department will increase profitability only; and investing in information technology will improve customer satisfaction but will not solve communication problems.

2.

Identified three possible ways to solve the problem: extensive personnel training in the involved departments; replacing the head of the marketing department or investing in IT.

3.

Agreed upon key performance indicators, such as customer satisfaction, customer retention, and product and customer profitability to assess the effectiveness of the proposed solution.

4.

Decided to conduct extensive training for marketing department personnel and limited communication training for production and finance departments. What is the correct sequence of these logical decision-making steps?

A. 1,2,3,4.

B. 2,1,3,4.

C. 3,1,2,4.

D. 2,3,1,4.