Question 1

The use of rolling standards to monitor and manage performance and build in continuous improvement is commonly referred to as:

Accepted Answer

A)  The ratchet effect. 
B)  Responsibility accounting. 
C)  Zero-based budgeting. 
D)  Kaizen. 
A)  The ratchet effect. 
B)  Responsibility accounting. 
C)  Zero-based budgeting. 
D)  Kaizen.

Question 2

In the design of a total quality management system, a natural trade-off will exist between prevention and detection costs.

Accepted Answer

A) True 
 B)False

Question 3

If a process is people-paced and lacks a reliable time-linked measure of capability, then the appropriate tool for improving capacity baseline measures is:

Accepted Answer

A)  Standard cost variance analysis. 
B)  Flexible budgeting. 
C)  Activity-based management. 
D)  Just-in-time production. 
A)  Standard cost variance analysis. 
B)  Flexible budgeting. 
C)  Activity-based management. 
D)  Just-in-time production.

Question 4

A capacity cost management system can only be applied to processes that possess a time-linked measure of process capability.

Accepted Answer

A) True 
 B)False

Question 5

Many years ago, Honda Motor Car Company designed an automatic transmission that could only be assembled and installed in a vehicle in one way. Any departures from the design would prevent a worker from completing installation. This design led to a zero initial failure rate for the transmission. The investments in engineering costs to design this transmission best illustrate:

Accepted Answer

A)  Prevention cost. 
B)  Detection cost. 
C)  Internal failure cost. 
D)  External failure cost. 
A)  Prevention cost. 
B)  Detection cost. 
C)  Internal failure cost. 
D)  External failure cost.

Question 6

A capacity cost management system and capacity variance analysis can only be used to support continuous improvement when:

Accepted Answer

A)  The kaizen philosophy is entrenched throughout the organization. 
B)  The process has a reliable, repetitive, time-linked measure of process capability. 
C)  The organization is committed to a total quality management system. 
D)  An activity-based costing system is in place. 
A)  The kaizen philosophy is entrenched throughout the organization. 
B)  The process has a reliable, repetitive, time-linked measure of process capability. 
C)  The organization is committed to a total quality management system. 
D)  An activity-based costing system is in place.

Question 7

The most significant component of the cost of quality is the cost of an external product failure.

Accepted Answer

A) True 
 B)False

Question 8

The percentage of time that manufacturing delivers a completed product on the schedule that was promised to customers is:

Accepted Answer

A)  On-time delivery to commit. 
B)  Manufacturing cycle time. 
C)  On-time shipping performance. 
D)  Theoretical delivery capacity. 
A)  On-time delivery to commit. 
B)  Manufacturing cycle time. 
C)  On-time shipping performance. 
D)  Theoretical delivery capacity.

Question 9

Deriving process improvements using a Western approach to management requires a total focus on eliminating waste from those processes.

Accepted Answer

A) True 
 B)False

Question 10

Bendix Company produces replacement brake pads for automobiles. The thickness of the abrasive material on the pads is critical to their performance. If the pads are too thin, they will wear prematurely, and if they are too thick, they will fit improperly resulting in excess brake noise and vibration. Bendix has determined that its costs are $500 when a nonconforming pad is installed in a customer's vehicle. The target thickness for the pads is 12 mm. It test-measures the thickness of the abrasive on a sample of five pads; the results are given in the table below.
   Required:
Compute the total quality loss for Bendix using the Taguchi loss function.

Accepted Answer

Bendix Company produces replacement brak

Question 11

A "trended average actual cost," where cost moves across time, and as one observation is added to the data set, the oldest observation is eliminated, is an illustration of:

Accepted Answer

A)  A zero-based average cost. 
B)  A weighted average cost. 
C)  A rolling average cost. 
D)  A geometric average cost. 
A)  A zero-based average cost. 
B)  A weighted average cost. 
C)  A rolling average cost. 
D)  A geometric average cost.

Question 12

Improvement focused on small incremental changes made as a result of ongoing efforts is characteristic of:

Accepted Answer

A)  Maintenance. 
B)  Innovation. 
C)  Kaizen. 
D)  Management by exception. 
A)  Maintenance. 
B)  Innovation. 
C)  Kaizen. 
D)  Management by exception.

Question 13

The ratchet effect refers to resetting goals higher whenever an existing goal is met.

Accepted Answer

A) True 
 B)False

Question 14

Hobby Express is a retail distributor of hobby and craft supplies. It commonly receives orders from customers specifying as many as 15 to 20 line items. Numerous customer complaints center on receiving orders that were not complete and being informed that several items were placed on back order. The company's shipping manager compiled the information below for delivery performance last week.
   Required:
Develop several delivery metrics and comment on changes that need to be made to existing performance and why.

Accepted Answer

Hobby Express is a retail distributor of

Question 15

Rework and scrap are common quality costs associated with external product failures.

Accepted Answer

A) True 
 B)False

Question 16

The budgeted waste variance results from below normal levels of demand for the output of the process.

Accepted Answer

A) True 
 B)False

Question 17

Kecks Bottling Company produces 2-liter soda bottles in its Somerset plant using an injection-molding machine that has a theoretical capacity of 60,480 bottles per week. For the most recently completed week, the company's capacity cost management system reported an efficiency waste variance of 3,144 bottles. This variance indicates that:

Accepted Answer

A)  Practical capacity exceeded theoretical capacity for the week. 
B)  Actual capacity used fell short of budgeted capacity. 
C)  Budgeted capacity exceeded normal capacity. 
D)  Normal capacity exceeded practical capacity. 
A)  Practical capacity exceeded theoretical capacity for the week. 
B)  Actual capacity used fell short of budgeted capacity. 
C)  Budgeted capacity exceeded normal capacity. 
D)  Normal capacity exceeded practical capacity.

Question 18

Style Retouche, Inc., produces compact paint pens used to repair small nicks in exterior automotive paint finishes. If the machinery that fills the pens is not completely cleaned between production runs of different colors, the resulting paint will not match the original color intended. Style Retouche estimates that the cost of a mismatched pen that reaches a customer is $40. The company's target for the residual content of the previous color remaining in the machinery is 0.00 parts per million. Using the Taguchi loss function, how does the quality loss for an actual residual content of 0.01 parts per million compare to the quality loss for an actual content of 0.02 parts per million?

Accepted Answer

A)  The quality loss at 0.02 parts per million is twice as large as the quality loss at 0.01 parts per million. 
B)  The quality loss at 0.02 parts per million is equal to the quality loss at 0.01 parts per million. 
C)  The quality loss at 0.02 parts per million is four times as large as the quality loss at 0.01 parts per million. 
D)  The quality loss at 0.02 parts per million is 40 times as large as the quality loss at 0.01 parts per million. 
A)  The quality loss at 0.02 parts per million is twice as large as the quality loss at 0.01 parts per million. 
B)  The quality loss at 0.02 parts per million is equal to the quality loss at 0.01 parts per million. 
C)  The quality loss at 0.02 parts per million is four times as large as the quality loss at 0.01 parts per million. 
D)  The quality loss at 0.02 parts per million is 40 times as large as the quality loss at 0.01 parts per million.

Question 19

Kecks Bottling Company produces 2-liter soda bottles in its Somerset plant using an injection-molding machine that has a theoretical capacity of 60,480 bottles per week. For the most recently completed week, the company's capacity cost management system reported an efficiency waste variance of 3,144 bottles. This variance indicates that:

Accepted Answer

A)  Demand for 2-liter bottles was less than normal. 
B)  All downtime for maintenance and process irregularities was within the unavoidable range. 
C)  The company experienced unexpected downtime on the machine for maintenance or other process irregularities. 
D)  The injection-molding machine consumed more than the standard quantity of raw material allowed for the level of production achieved. 
A)  Demand for 2-liter bottles was less than normal. 
B)  All downtime for maintenance and process irregularities was within the unavoidable range. 
C)  The company experienced unexpected downtime on the machine for maintenance or other process irregularities. 
D)  The injection-molding machine consumed more than the standard quantity of raw material allowed for the level of production achieved.

Question 20

The Japanese term "muda" may be best described as:

Accepted Answer

A)  Managing to make labor more productive. 
B)  Process improvements made through the elimination of wasteful activities and operations. 
C)  Maximizing a product's value proposition. 
D)  Pursuit of a zero-defects policy. 
A)  Managing to make labor more productive. 
B)  Process improvements made through the elimination of wasteful activities and operations. 
C)  Maximizing a product's value proposition. 
D)  Pursuit of a zero-defects policy.

The use of rolling standards to monitor and manage performance and build in continuous improvement is commonly referred to as:

In the design of a total quality management system, a natural trade-off will exist between prevention and detection costs.

If a process is people-paced and lacks a reliable time-linked measure of capability, then the appropriate tool for improving capacity baseline measures is:

A capacity cost management system can only be applied to processes that possess a time-linked measure of process capability.

A capacity cost management system and capacity variance analysis can only be used to support continuous improvement when:

The most significant component of the cost of quality is the cost of an external product failure.

The percentage of time that manufacturing delivers a completed product on the schedule that was promised to customers is:

Deriving process improvements using a Western approach to management requires a total focus on eliminating waste from those processes.

A "trended average actual cost," where cost moves across time, and as one observation is added to the data set, the oldest observation is eliminated, is an illustration of:

Improvement focused on small incremental changes made as a result of ongoing efforts is characteristic of:

The ratchet effect refers to resetting goals higher whenever an existing goal is met.

Rework and scrap are common quality costs associated with external product failures.

The budgeted waste variance results from below normal levels of demand for the output of the process.

The Japanese term "muda" may be best described as:

Business Planning and Analysis: An Integrative Framework for Management Accounting

Measuring and Evaluating Performance

Defining and Using Cost Estimates

Cost Pools, Capacity, and Activity- Based Costing

Understanding the Management Process

Planning in the Product Domain

Assessing and Improving Product Profitability

Setting Process Expectations

Setting Performance Expectations at the Entity Level

Setting Performance Expectations in Large, Complex Organizations

Evaluating and Improving Entity Performance

Setting and Achieving Targets in the Customer Domain

Strategic Cost Management and the Value Chain Domain

Filters

Exam 9: Evaluating and Improving Process Performance

The use of rolling standards to monitor and manage performance and build in continuous improvement is commonly referred to as:

In the design of a total quality management system, a natural trade-off will exist between prevention and detection costs.

If a process is people-paced and lacks a reliable time-linked measure of capability, then the appropriate tool for improving capacity baseline measures is:

A capacity cost management system can only be applied to processes that possess a time-linked measure of process capability.

A capacity cost management system and capacity variance analysis can only be used to support continuous improvement when:

The most significant component of the cost of quality is the cost of an external product failure.

The percentage of time that manufacturing delivers a completed product on the schedule that was promised to customers is:

Deriving process improvements using a Western approach to management requires a total focus on eliminating waste from those processes.

A "trended average actual cost," where cost moves across time, and as one observation is added to the data set, the oldest observation is eliminated, is an illustration of:

Improvement focused on small incremental changes made as a result of ongoing efforts is characteristic of:

The ratchet effect refers to resetting goals higher whenever an existing goal is met.

Rework and scrap are common quality costs associated with external product failures.

The budgeted waste variance results from below normal levels of demand for the output of the process.

The Japanese term "muda" may be best described as:

Business Planning and Analysis: An Integrative Framework for Management Accounting

Measuring and Evaluating Performance

Defining and Using Cost Estimates

Cost Pools, Capacity, and Activity- Based Costing

Understanding the Management Process

Planning in the Product Domain

Assessing and Improving Product Profitability

Setting Process Expectations

Setting Performance Expectations at the Entity Level

Setting Performance Expectations in Large, Complex Organizations

Evaluating and Improving Entity Performance

Setting and Achieving Targets in the Customer Domain

Strategic Cost Management and the Value Chain Domain

Filters