Question 1

Spoilage is an example of:

Accepted Answer

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

Question 2

Answer the following questions using the information below:
Barossa Manufacturing expects to spend $500 000 in 2018 in appraisal costs if it does not change its incoming materials inspection method.If it decides to implement a new receiving method,it will save $50 000 in fixed appraisal costs and variable costs of $0.50 per unit of finished product.The new method involves $70 000 in training costs and an additional $170 000 in annual equipment rental.It takes four units of material for each finished product.
Internal failure costs average $80 per failed unit of finished goods.During 2013,5% of all completed items had to be reworked.External failure costs average $200 per failed unit.The company's average external failures is 1% of units sold.The company carries no ending inventories because all jobs are on a per order basis and a just-in-time inventory ordering method is used.
-What is the net effect on appraisal costs for 2018,assuming the new receiving method is implemented and that 800 000 material units are received?

Accepted Answer

A) $20 000 increase 
B) $240 000 increase 
C) $220 000 decrease 
D) $20 000 decrease 
A) $20 000 increase 
B) $240 000 increase 
C) $220 000 decrease 
D) $20 000 decrease A

Question 3

Answer the following questions using the information below:
Kosciuszko Landscapes produces Landscape photographs for sale through catalogues.The company has two workstations: photo production and framing.The photo production station is limited by the speed of operating the photo development machine.Framing is limited by the speed of the employees.Framing normally waits for work from photo production.Each department works an eight-hour day.If Kosciuszko Landscapes adds an earlier half shift so that photo production begins work four hours earlier than framing each day,the two departments generally finish their work at about the same time.This eliminates the bottleneck,and increases finished units produced each day by 300 units.All units produced can be sold.The cost of operating the photo production department four more hours each day is $2800.The contribution margin of the finished products is $15 each.
-What is the total production per day if the change is made?

Accepted Answer

A) 600 units 
B) 50 units 
C) 300 units 
D) 900 units 
A) 600 units 
B) 50 units 
C) 300 units 
D) 900 units D

Question 4

Answer the following questions using the information below:
Kosciuszko Landscapes produces Landscape photographs for sale through catalogues.The company has two workstations: photo production and framing.The photo production station is limited by the speed of operating the photo development machine.Framing is limited by the speed of the employees.Framing normally waits for work from photo production.Each department works an eight-hour day.If Kosciuszko Landscapes adds an earlier half shift so that photo production begins work four hours earlier than framing each day,the two departments generally finish their work at about the same time.This eliminates the bottleneck,and increases finished units produced each day by 300 units.All units produced can be sold.The cost of operating the photo production department four more hours each day is $2800.The contribution margin of the finished products is $15 each.
-Two common operational measures of time are customer-response time and manufacturing lead time.

Accepted Answer

A) True 
 B)False

Question 5

Cost of quality financial measures will usually deteriorate when non-financial measures of quality are emphasised and improved.

Accepted Answer

A) True 
 B)False

Question 6

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 7

An important difference between financial measures of quality and non-financial measures of quality is that:

Accepted Answer

A) financial measures of quality tend to be useful indicators of future long-term performance,while non-financial measures have more of a short-term focus. 
B) non-financial measures are generally too subjective to have any long-term value. 
C) non-financial measures of quality tend to be useful indicators of future long-term performance,while financial measures of quality have more of a short-term focus. 
D) None of these answers are correct. 
A) financial measures of quality tend to be useful indicators of future long-term performance,while non-financial measures have more of a short-term focus. 
B) non-financial measures are generally too subjective to have any long-term value. 
C) non-financial measures of quality tend to be useful indicators of future long-term performance,while financial measures of quality have more of a short-term focus. 
D) None of these answers are correct.

Question 8

Answer the following questions using the information below:
Nurioopta Products has a budget of $900 000 in 2018 for prevention costs.If it decides to automate a portion of its prevention activities,it will save $65 000 in variable costs.The new method will require $24 000 in training costs and $110 000 in annual equipment costs.Management is willing to adjust the budget for an amount up to the cost of the new equipment.The budgeted production level is 170 000 units.
Appraisal costs for the year are budgeted at $600 000.The new prevention procedures will save appraisal costs of $30 000.Internal failure costs average $15 per failed unit of finished goods.The internal failure rate is expected to be 3% of all completed items.The proposed changes will cut the internal failure rate by one-third.Internal failure units are destroyed.External failure costs average $54 per failed unit.The company's average external failures average 3% of units sold.The new proposal will reduce this rate by 50%.Assume all units produced are sold and there are no ending inventories.
-How much do external failure costs change if all changes are as anticipated with the new prevention procedures? Assume all units produced are sold and there are no ending inventories.

Accepted Answer

A) $137 700 decrease 
B) $243 000 decrease 
C) $137 700 increase 
D) None of these answers are correct. 
A) $137 700 decrease 
B) $243 000 decrease 
C) $137 700 increase 
D) None of these answers are correct.

Question 9

When considering customer needs and wants,only financial measures can be used because they are easily measured.

Accepted Answer

A) True 
 B)False

Question 10

Answer the following questions using the information below:
Nurioopta Products has a budget of $900 000 in 2018 for prevention costs.If it decides to automate a portion of its prevention activities,it will save $65 000 in variable costs.The new method will require $24 000 in training costs and $110 000 in annual equipment costs.Management is willing to adjust the budget for an amount up to the cost of the new equipment.The budgeted production level is 170 000 units.
Appraisal costs for the year are budgeted at $600 000.The new prevention procedures will save appraisal costs of $30 000.Internal failure costs average $15 per failed unit of finished goods.The internal failure rate is expected to be 3% of all completed items.The proposed changes will cut the internal failure rate by one-third.Internal failure units are destroyed.External failure costs average $54 per failed unit.The company's average external failures average 3% of units sold.The new proposal will reduce this rate by 50%.Assume all units produced are sold and there are no ending inventories.
-What is the net change in the budget of prevention costs if the procedures are automated in 2018? Will management agree with the changes?

Accepted Answer

A) $134 000 increase,no 
B) $69 000 increase,yes 
C) $65 000 increase,no 
D) $65 000 decrease,yes 
A) $134 000 increase,no 
B) $69 000 increase,yes 
C) $65 000 increase,no 
D) $65 000 decrease,yes

Question 11

Most companies spend a large amount of money measuring the financial costs of design quality.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

In which perspective of the balanced scorecard,reported COQ numbers are affected for making improvements in internal business processes?
Variant question

Accepted Answer

A) Financial 
B) Customer 
C) Internal process 
D) Learning 
A) Financial 
B) Customer 
C) Internal process 
D) Learning

Question 14

Managers must improve internal business processes because they affect many of the quality-related factors that influence customer satisfaction and improve financial performance.

Accepted Answer

A) True 
 B)False

Question 15

When demand uncertainty is ________ ,some unused capacity is desirable.

Accepted Answer

A) low 
B) non-existent 
C) average 
D) high 
A) low 
B) non-existent 
C) average 
D) high

Question 16

Two important drivers of time are limited capacity and bottlenecks.

Accepted Answer

A) True 
 B)False

Question 17

What are costs incurred to find a nonconforming product before it is shipped to customers known as?
Variant question

Accepted Answer

A) Prevention costs 
B) Appraisal costs 
C) Internal failure costs 
D) External failure costs 
A) Prevention costs 
B) Appraisal costs 
C) Internal failure costs 
D) External failure costs

Question 18

Companies that use manufacturing lead time as the base for allocating manufacturing costs to products consider that it has the following benefit(s):

Accepted Answer

A) operating profit rises. 
B) total overhead costs decrease. 
C) managers are motivated to reduce the time taken to manufacture products. 
D) All of these answers are correct. 
A) operating profit rises. 
B) total overhead costs decrease. 
C) managers are motivated to reduce the time taken to manufacture products. 
D) All of these answers are correct.

Question 19

Answer the following questions using the information below:
Barossa Manufacturing expects to spend $500 000 in 2018 in appraisal costs if it does not change its incoming materials inspection method.If it decides to implement a new receiving method,it will save $50 000 in fixed appraisal costs and variable costs of $0.50 per unit of finished product.The new method involves $70 000 in training costs and an additional $170 000 in annual equipment rental.It takes four units of material for each finished product.
Internal failure costs average $80 per failed unit of finished goods.During 2013,5% of all completed items had to be reworked.External failure costs average $200 per failed unit.The company's average external failures is 1% of units sold.The company carries no ending inventories because all jobs are on a per order basis and a just-in-time inventory ordering method is used.
-How much will external failure costs change assuming 800 000 units of materials are received and that product failures with customers are cut in half with the new receiving method?

Accepted Answer

A) $500 000 decrease 
B) $200 000 decrease 
C) $10 000 increase 
D) $320 000 decrease 
A) $500 000 decrease 
B) $200 000 decrease 
C) $10 000 increase 
D) $320 000 decrease

Question 20

COQ measures assist in problem solving by comparing costs and benefits of different quality-improvement programs and setting priorities for cost reduction.

Accepted Answer

A) True 
 B)False

Spoilage is an example of:

Cost of quality financial measures will usually deteriorate when non-financial measures of quality are emphasised and improved.

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

An important difference between financial measures of quality and non-financial measures of quality is that:

When considering customer needs and wants,only financial measures can be used because they are easily measured.

Most companies spend a large amount of money measuring the financial costs of design quality.

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

In which perspective of the balanced scorecard,reported COQ numbers are affected for making improvements in internal business processes? Variant question

Managers must improve internal business processes because they affect many of the quality-related factors that influence customer satisfaction and improve financial performance.

When demand uncertainty is ________ ,some unused capacity is desirable.

Two important drivers of time are limited capacity and bottlenecks.

What are costs incurred to find a nonconforming product before it is shipped to customers known as? Variant question

Companies that use manufacturing lead time as the base for allocating manufacturing costs to products consider that it has the following benefit(s):

COQ measures assist in problem solving by comparing costs and benefits of different quality-improvement programs and setting priorities for cost reduction.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters

Exam 16: Quality, Time and the Balanced Scorecard

Spoilage is an example of:

Cost of quality financial measures will usually deteriorate when non-financial measures of quality are emphasised and improved.

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

An important difference between financial measures of quality and non-financial measures of quality is that:

When considering customer needs and wants,only financial measures can be used because they are easily measured.

Most companies spend a large amount of money measuring the financial costs of design quality.

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

In which perspective of the balanced scorecard,reported COQ numbers are affected for making improvements in internal business processes? Variant question

Managers must improve internal business processes because they affect many of the quality-related factors that influence customer satisfaction and improve financial performance.

When demand uncertainty is ________ ,some unused capacity is desirable.

Two important drivers of time are limited capacity and bottlenecks.

What are costs incurred to find a nonconforming product before it is shipped to customers known as? Variant question

Companies that use manufacturing lead time as the base for allocating manufacturing costs to products consider that it has the following benefit(s):

COQ measures assist in problem solving by comparing costs and benefits of different quality-improvement programs and setting priorities for cost reduction.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters