Question 1

How much will appraisal costs change assuming the new prevention methods reduce material failures by 40% in the appraisal phase?

Accepted Answer

The answer of How much will appraisal costs change assuming...

Question 2

Prevention costs include all of the following EXCEPT

Accepted Answer

A)  quality engineering. 
B)  design engineering. 
C)  product testing. 
D)  supplier evaluations. 
E)  statistical process control. 
A)  quality engineering. 
B)  design engineering. 
C)  product testing. 
D)  supplier evaluations. 
E)  statistical process control.

Question 3

Costs incurred by a nonconforming product detected before it is shipped to customers are

Accepted Answer

A)  prevention costs. 
B)  appraisal costs. 
C)  internal failure costs. 
D)  external failure costs. 
E)  design costs. 
A)  prevention costs. 
B)  appraisal costs. 
C)  internal failure costs. 
D)  external failure costs. 
E)  design costs.

Question 4

The objective of the theory of constraints is to increase throughput contribution while decreasing investments and operating costs.

Accepted Answer

A) True 
 B)False

Question 5

Brix, Inc. prepares frozen food for fast-food restaurants. It has two workstations, cooking and assembly. The cooking station is limited by the cooking time of the food. Assembly is limited by the speed of the workers. Assembly normally waits on food from cooking. Because the demand has increased in recent months to 2,800 dozen units, management is considering adding another cook station or else having the cooks start to work earlier. The monthly cost of operating the cooking station one more hour each day is $2,400. The cost of adding another cook station would add an average of $10 per hour. The current operating hours total eight hours a day, 22 days a month. The contribution margin of the finished products is currently $8 per dozen. Inventory carrying costs average $2.00 per dozen per month. Either the extra hour or the new cook station would increase production by 20 dozen a day with a long-run increase of 80 dozen units in finished goods inventory to 280 dozen.
Required:
a. What is the total production per month if the change is made?
b. What is the increase in the expected monthly product contribution for each of the possible changes? Assume long-run production equals sales.

Accepted Answer

a.
Total dozen per month = 2,8

Question 6

Which of the following is not included in customer response time?

Accepted Answer

A)  order delivery time 
B)  order manufacturing time 
C)  order waiting time 
D)  order receipt time 
E)  order opening time 
A)  order delivery time 
B)  order manufacturing time 
C)  order waiting time 
D)  order receipt time 
E)  order opening time

Question 7

Allocated cost amounts are an important determinant of the costs of a quality improvement program.

Accepted Answer

A) True 
 B)False

Question 8

Vestor Ltd. has estimated a 90% incremental unit time learning curve applies to labour time to manufacture its new product. The first unit took 18 hours. If Vestor's estimates are correct, how many hours will be used to manufacture 4 total units?

Accepted Answer

A)  14.58 hours 
B)  64.80 hours 
C)  72.00 hours 
D)  64.01 hours 
E)  58.32 hours 
A)  14.58 hours 
B)  64.80 hours 
C)  72.00 hours 
D)  64.01 hours 
E)  58.32 hours

Question 9

The number of defects shipped to customers as a percentage of total units shipped is a type of nonfinancial quality measure.

Accepted Answer

A) True 
 B)False

Question 10

Two important drivers of time are limited capacity and bottlenecks.

Accepted Answer

A) True 
 B)False

Question 11

What is the total production per day if the change is made?

Accepted Answer

A)  6400 units 
B)  800 units 
C)  880 units 
D)  1600 units 
E)  640 units 
A)  6400 units 
B)  800 units 
C)  880 units 
D)  1600 units 
E)  640 units

Question 12

Plotting learning curve observations is helpful in selecting the appropriate learning curve model.

Accepted Answer

A) True 
 B)False

Question 13

The costs relating to product testing are classified as prevention costs.

Accepted Answer

A) True 
 B)False

Question 14

Nidek manufactures sportswear. Classify each of the following quality costs as prevention, appraisal, internal failure or external failure.
a. Disposal of spoiled work in process
b. Downtime due to quality problems
c. Expediting work to meet delivery schedule
d. Field testing
e. Maintaining a complaint department
f. Product liability
g. Quality training
h. Reinspection
i. Rework direct manufacturing labour and overhead
j. Scrap
k. Testing and inspecting of machinery
l. Testing and inspecting of direct materials
m. Utilities in inspection area of plant
n. Warranty repairs

Accepted Answer

The answer of Nidek manufactures sportswear. Classify each of the...

Question 15

What is the net effect on appraisal costs for the current year assuming the new receiving method is implemented and that 400,000 material units are received?

Accepted Answer

A)  $10,000 increase 
B)  $10,000 decrease 
C)  $100,000 decrease 
D)  $110,000 increase 
E)  $115,000 decrease 
A)  $10,000 increase 
B)  $10,000 decrease 
C)  $100,000 decrease 
D)  $110,000 increase 
E)  $115,000 decrease

Question 16

The demand for Ballard's Glass Company's products varies. Each order is one window, and each window takes 26 minutes to install. Assuming wait time is 12 minutes, and order receipt time equals 21 minutes what is the cycle time for an order on average?

Accepted Answer

A)  21 minutes 
B)  26 minutes 
C)  38 minutes 
D)  41 minutes 
E)  59 minutes 
A)  21 minutes 
B)  26 minutes 
C)  38 minutes 
D)  41 minutes 
E)  59 minutes

Question 17

The incremental unit-time learning model with a 90% learning curve indicates that if it takes 100 minutes to manufacture the first unit of a new model, then the second unit will take only 90 minutes to manufacture.

Accepted Answer

A) True 
 B)False

Question 18

The Cost of Quality measure has all of the following advantages EXCEPT

Accepted Answer

A)  being a useful measure of comparing different quality improvement projects. 
B)  serving as a common denominator for evaluating tradeoffs among prevention and failure costs. 
C)  focusing on how costly poor quality can be. 
D)  being indicators of long-term performance. 
E)  setting priorities for achieving maximum cost reduction. 
A)  being a useful measure of comparing different quality improvement projects. 
B)  serving as a common denominator for evaluating tradeoffs among prevention and failure costs. 
C)  focusing on how costly poor quality can be. 
D)  being indicators of long-term performance. 
E)  setting priorities for achieving maximum cost reduction.

Question 19

When using a control chart, a manager does not investigate the activity when

Accepted Answer

A)  most observations are outside the preset range. 
B)  all observations are outside the preset range. 
C)  all observations are within the range of preset standard deviations. 
D)  most observations are within the range of 2 standard deviations. 
E)  all observations are determined to be non-random. 
A)  most observations are outside the preset range. 
B)  all observations are outside the preset range. 
C)  all observations are within the range of preset standard deviations. 
D)  most observations are within the range of 2 standard deviations. 
E)  all observations are determined to be non-random.

Question 20

Which of the following are time drivers?

Accepted Answer

A)  bottlenecks 
B)  limited capacity 
C)  uncertainty as to when customers will order products 
D)  average number of orders per customer 
E)  uncertainty as to when customers will order products, limited capacity, and bottlenecks 
A)  bottlenecks 
B)  limited capacity 
C)  uncertainty as to when customers will order products 
D)  average number of orders per customer 
E)  uncertainty as to when customers will order products, limited capacity, and bottlenecks

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

How much will appraisal costs change assuming the new prevention methods reduce material failures by 40% in the appraisal phase?

Prevention costs include all of the following EXCEPT

Costs incurred by a nonconforming product detected before it is shipped to customers are

The objective of the theory of constraints is to increase throughput contribution while decreasing investments and operating costs.

Which of the following is not included in customer response time?

Allocated cost amounts are an important determinant of the costs of a quality improvement program.

Vestor Ltd. has estimated a 90% incremental unit time learning curve applies to labour time to manufacture its new product. The first unit took 18 hours. If Vestor's estimates are correct, how many hours will be used to manufacture 4 total units?

The number of defects shipped to customers as a percentage of total units shipped is a type of nonfinancial quality measure.

Two important drivers of time are limited capacity and bottlenecks.

What is the total production per day if the change is made?

Plotting learning curve observations is helpful in selecting the appropriate learning curve model.

The costs relating to product testing are classified as prevention costs.

What is the net effect on appraisal costs for the current year assuming the new receiving method is implemented and that 400,000 material units are received?

The demand for Ballard's Glass Company's products varies. Each order is one window, and each window takes 26 minutes to install. Assuming wait time is 12 minutes, and order receipt time equals 21 minutes what is the cycle time for an order on average?

The incremental unit-time learning model with a 90% learning curve indicates that if it takes 100 minutes to manufacture the first unit of a new model, then the second unit will take only 90 minutes to manufacture.

The Cost of Quality measure has all of the following advantages EXCEPT

When using a control chart, a manager does not investigate the activity when

Which of the following are time drivers?

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

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Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

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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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