Exam 19: Costing and the Value Chain

Of the following processes, which is chiefly concerned with products and services that have not yet been developed?

Premo Pens, Inc. is in the process of developing a new pen to replace its existing top-of-line Executive Model. Market research has identified the critical features the pen must have and it is estimated that customers would be willing to pay $30 for a pen with these features. Premo's production manager estimates that it will cost $26 to produce the proposed model. The current Executive Model sells for $24 and has a total production cost of $20. A competitor sells a pen similar to the proposed model, but without Premo's patented easy retract feature, for $28. It is estimated to cost the competitor $25 to produce. If Premo seeks to earn a 20% return on sales on the new model, which of the following represents the target cost for the new pen?

Which of the following would not be considered a cost of quality?

"ISO 9000" certification requires a detailed audit and documentation of the processes and procedures a company has implemented for quality conformance.

Summit has learned that a competitor plans to introduce a similar widget at a price of $80. In response, Summit may reduce its selling price to $80. If Summit requires a 25% return on sales, what is the target cost for the new widget?

Internal failure costs happen when an unsatisfactory good or service is delivered to a customer.

Resourceful's manufacturing efficiency ratio is ___________%.

Resourceful's total cycle time is __________ days.

During cycle time, value is added only during: