Question 1

The costs relating to new materials testing are classified as appraisal costs.

Accepted Answer

A) True 
 B)False  False

Question 2

Customer response time is the time between when a company first markets a new product, and when sales exceed supplies on hand (test inventory).

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following statements is TRUE?

Accepted Answer

A)  The elimination of defects always increases productivity. 
B)  Nonbottleneck operations should be refined for high efficiency before starting on bottleneck improvement because nonbottleneck operations are generally easier to correct and improve. 
C)  Throughput contribution is not increased when nonbottleneck output is increased. 
D)  Quality and time are seldom related in service industries. 
E)  The elimination of defects always decreases revenues. 
A)  The elimination of defects always increases productivity. 
B)  Nonbottleneck operations should be refined for high efficiency before starting on bottleneck improvement because nonbottleneck operations are generally easier to correct and improve. 
C)  Throughput contribution is not increased when nonbottleneck output is increased. 
D)  Quality and time are seldom related in service industries. 
E)  The elimination of defects always decreases revenues. C

Question 4

Several companies have adopted manufacturing lead time as the base for allocating indirect manufacturing costs to products.

Accepted Answer

A) True 
 B)False

Question 5

For a fast-food restaurant the average waiting time might be formulated as

Accepted Answer

A)    
B)  [(average number of customers) × (average serving time)]/capacity 
C)    
D)    
E)  [(average number of employees) × (average serving time)]/serving time 
A)    
B)  [(average number of customers) × (average serving time)]/capacity 
C)    
D)    
E)  [(average number of employees) × (average serving time)]/serving time

Question 6

When using a control chart, the observations outside the upper and lower product specification limits are ordinarily regarded as nonrandom and worth investigating.

Accepted Answer

A) True 
 B)False

Question 7

An example of a nonfinancial measure for customer satisfaction is

Accepted Answer

A)  delivery delay. 
B)  employee turnover. 
C)  number of defects on the production line. 
D)  process yield. 
E)  number of employees trained. 
A)  delivery delay. 
B)  employee turnover. 
C)  number of defects on the production line. 
D)  process yield. 
E)  number of employees trained.

Question 8

Conformance quality is the performance of a product or service relative to its design and product specifications.

Accepted Answer

A) True 
 B)False

Question 9

A learning curve measures the effect of learning on efficiency.

Accepted Answer

A) True 
 B)False

Question 10

The number of defects in units shipped to customers as a percentage of total units shipped, is a non-financial measure.

Accepted Answer

A) True 
 B)False

Question 11

How much will internal failure costs change assuming 400,000 units of materials are received and that the new receiving method reduces the amount of unacceptable product units in the manufacturing process by 20 percent?

Accepted Answer

A)  $10,000 increase 
B)  $50,000 decrease 
C)  $160,000 decrease 
D)  $320,000 decrease 
E)  $500,000 decrease 
A)  $10,000 increase 
B)  $50,000 decrease 
C)  $160,000 decrease 
D)  $320,000 decrease 
E)  $500,000 decrease

Question 12

In a manufacturing operation, the bottleneck machine sets the pace for all non-bottleneck machines.

Accepted Answer

A) True 
 B)False

Question 13

When new products are introduced, learning-curve effects can have a major influence on production scheduling.

Accepted Answer

A) True 
 B)False

Question 14

Manufacturing lead times can affect costs but do not affect sales revenue.

Accepted Answer

A) True 
 B)False

Question 15

The two basic aspects of quality are quality of design and conformance quality. Define and give an
example of each.

Accepted Answer

Quality of design measures how closely t

Question 16

Throughput contribution is equal to revenues minus direct material and direct labour costs.

Accepted Answer

A) True 
 B)False

Question 17

Uncertainty about when customers will demand a product or service is generally credited as being the primary cause of bottlenecks.

Accepted Answer

A) True 
 B)False

Question 18

What is the net change in the budget of prevention costs if the procedures are automated?

Accepted Answer

The answer of What is the net change in the...

Question 19

An example of a nonfinancial measure for customer satisfaction is

Accepted Answer

A)  Average manufacturing time for for key products. 
B)  Contribution margin. 
C)  Percentage of products that fail soon after delivery. 
D)  Number of employees trained on managing bottleneck operations. 
E)  Number of units reworked. 
A)  Average manufacturing time for for key products. 
B)  Contribution margin. 
C)  Percentage of products that fail soon after delivery. 
D)  Number of employees trained on managing bottleneck operations. 
E)  Number of units reworked.

Question 20

What is the cycle time for an order?

Accepted Answer

A)  2 minutes per tool 
B)  3 minutes per tool 
C)  5 minutes per tool 
D)  7 minutes per tool 
E)  4 minutes per tool 
A)  2 minutes per tool 
B)  3 minutes per tool 
C)  5 minutes per tool 
D)  7 minutes per tool 
E)  4 minutes per tool

Exam 19: Cost Management: Quality, Time, and the Theory of Constraints

The costs relating to new materials testing are classified as appraisal costs.

Customer response time is the time between when a company first markets a new product, and when sales exceed supplies on hand (test inventory).

Which of the following statements is TRUE?

Several companies have adopted manufacturing lead time as the base for allocating indirect manufacturing costs to products.

For a fast-food restaurant the average waiting time might be formulated as

When using a control chart, the observations outside the upper and lower product specification limits are ordinarily regarded as nonrandom and worth investigating.

An example of a nonfinancial measure for customer satisfaction is

Conformance quality is the performance of a product or service relative to its design and product specifications.

A learning curve measures the effect of learning on efficiency.

The number of defects in units shipped to customers as a percentage of total units shipped, is a non-financial measure.

How much will internal failure costs change assuming 400,000 units of materials are received and that the new receiving method reduces the amount of unacceptable product units in the manufacturing process by 20 percent?

In a manufacturing operation, the bottleneck machine sets the pace for all non-bottleneck machines.

When new products are introduced, learning-curve effects can have a major influence on production scheduling.

Manufacturing lead times can affect costs but do not affect sales revenue.

The two basic aspects of quality are quality of design and conformance quality. Define and give an example of each.

Throughput contribution is equal to revenues minus direct material and direct labour costs.

Uncertainty about when customers will demand a product or service is generally credited as being the primary cause of bottlenecks.

What is the net change in the budget of prevention costs if the procedures are automated?

An example of a nonfinancial measure for customer satisfaction is

What is the cycle time for an order?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

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