Deck 19: Costing and the Value Chain

Question 1

Examples of value-added activities include all of the following except:

A) Product design.
B) Material movement.
C) Assembly activities.
D) Establish an effective distribution network.

Answer 1

Material movement.

Question 2

Of the following components of total quality cost, which is most damaging to a company attempting to achieve a reputation as a world-class manufacturer?

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

Answer 2

External failure costs

Question 3

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

A) Just-in-time manufacturing.
B) Activity-based management.
C) Target costing.
D) Total quality management.

Answer 3

Target costing.

Question 4

For a furniture manufacturer, which of the following activities could not be eliminated without changing the customer's perception of the product's desirability?

A) Inspection of incoming shipments of wood and fabrics.
B) Movement of work-in-process from one workstation to another.
C) Set-up of machinery to produce different pieces of furniture.
D) Reducing the product's distribution network.

Question 5

The cost borne by the customer of disposing of nickel-cadmium batteries is a component of the batteries':

A) Life-cycle cost.
B) Overhead cost.
C) Cost of quality.
D) Direct production cost.

Question 6

Listed below are eight technical accounting terms introduced or emphasized in this chapter
Each of the following statements may (or may not) describe one of these technical terms. In the space provided below each statement, indicate the accounting term described, or answer "None" if the statement does not correctly describe any of the terms.
a) The process of using activity-based costs to help reduce or eliminate non-value-added activities.
b) Can be eliminated without affecting the desirability of the product from the perspective of the customer.
c) The length of time for a product to pass completely through a specific manufacturing process.
d) If eliminated, the desirability of the product to consumers is decreased.
e) Consideration of all potential resources that will be consumed by a product from development through disposal.
f) A method in which a product's selling price is determined by adding a fixed profit margin to its production cost.
g) An approach that explicitly monitors quality costs and rewards quality enhancing behavior.

Question 7

Listed below are eight components of the total cost of quality. In the space provided identify each as a cost of prevention, appraisal, internal failure, or external failure.
-Product design_______________

Question 8

Listed below are eight components of the total cost of quality. In the space provided identify each as a cost of prevention, appraisal, internal failure, or external failure.
-Product returns due to defects_______________

Question 9

Listed below are eight components of the total cost of quality. In the space provided identify each as a cost of prevention, appraisal, internal failure, or external failure.
-Inspection of raw materials shipments_______________

Question 10

Listed below are eight components of the total cost of quality. In the space provided identify each as a cost of prevention, appraisal, internal failure, or external failure.
-Employee training_______________

Question 11

Listed below are eight components of the total cost of quality. In the space provided identify each as a cost of prevention, appraisal, internal failure, or external failure.
-Rework of defective units prior to shipment_______________

Question 12

Listed below are eight components of the total cost of quality. In the space provided identify each as a cost of prevention, appraisal, internal failure, or external failure.
-Estimated lost sales due to poor quality_______________

Question 13

Listed below are eight components of the total cost of quality. In the space provided identify each as a cost of prevention, appraisal, internal failure, or external failure.
-Warranty expense_______________

Question 14

Listed below are eight components of the total cost of quality. In the space provided identify each as a cost of prevention, appraisal, internal failure, or external failure.
-Inspection of finished goods_______________

Question 15

Listed below are eight components of the total cost of quality. In the space provided identify each as a cost of prevention, appraisal, internal failure, or external failure.
-Scrap
_______________

Question 16

Resourceful Corporation is considering the implementation of a JIT inventory system. The company recently analyzed its cycle time to determine the average number of days spent in each activity of its production process. A summary of the analysis is shown below:
a) Resourceful's value-adding production activities include:
b) Resourceful's total cycle time is __________ days.
c) Resourceful's manufacturing efficiency ratio is __________%.
d) Which activities might be reduced or eliminated should Resourceful implement a JIT system?