When a computer company selects a mix of strategies in order to create sustainable competitive advantage, it is following a a. focusing strategy. b. low-cost strategy. c. differentiation strategy. d. strategic positioning strategy.
1. When a computer company selects a mix of strategies in order to create sustainable competitive advantage, it is following a
a. focusing strategy.
b. low-cost strategy.
c. differentiation strategy.
d. strategic positioning strategy.
2. _______________ are those factors that drive the cost of day-to-day activities performed as a result of the structure and processes selected by the organization.
a. Organizational activities
b. Organizational cost drivers
c. Operational activities
d. Operational cost drivers
3. Which of the following are true about total quality control?
a. Total quality control is an approach to differentiate and reduce overall quality costs.
b. Total quality control demands production of defect-free products.
c. Total quality control links suppliers closely with the firm.
d. All of these statements are true about total quality control.
4. Which of the following is NOT a stage of the marketing viewpoint of the product life cycle?
5. At which stage of the consumable life-cycle is price sensitivity low?
6. Which of the following is part of the cost and process dimensions of the activity-based management model?
b. driver analysis
d. products and customers
7. _______________ focuses on non-value-added activities.
a. Activity sharing
b. Activity elimination
c. Activity selection
d. Activity reduction
8. Value-added costs equal standard quantity times
a. non-value-added costs.
b. currently attainable standards.
c. standard price.
d. actual price.
9. Each unit of product requires 16 pounds of material. Due to scrap and rework, each unit has been averaging 18 pounds of material. The material costs $6 per pound.
If the company wants to reduce non-value-added costs by 25 percent next year, the currently attainable standard for material would be
a. 16.00 pounds.
b. 16.80 pounds.
c. 17.50 pounds.
d. 18.00 pounds.
10. Sasha Cat Company sells one of its products for $100 each. Sales volume averages 750 units per year. Recently, its main competitor reduced the price of its product to $80. Sasha Cat Company expects sales to drop dramatically unless it matches the competitor’s price. In addition, the current profit per unit must be maintained. Information about the product (for production of 750) is as follows:
SQ AQ Actual Cost
Materials (pounds) 2,000 2,500 $25,000
Labor (hours) 450 500 12,500
Setups (hours) 0 600 7,500
Material handling (moves) 0 300 3,750
Warranties (number repaired) 0 200 15,000
The non-value-added cost per unit is
11. Which of the following is NOT an advantage of strategic-based responsibility accounting?
a. It includes perspectives that serve as a source of competitive advantage.
b. Change efforts are directed by the mission and strategy.
c. Responsibility is centralized within the organization.
d. All are advantages of strategic-based responsibility accounting.
12. Which of the following would be a nonfinancial measure?
a. customer profitability
b. employee capabilities
c. return on investment
d. cost per unit
13. Which of the following features make stretch targets feasible?
a. The targets are set in isolation by top management.
b. The measures are linked by causal relationships.
c. The measures are based on currently attainable standard costs.
d. The targets are set at desired levels for twenty years to ensure long-term performance.
14. In the Balanced Scorecard system, core objectives and measures
a. are common across all organizations.
b. are common across all scorecard perspectives.
c. are common across departments.
d. None of these are true.
At the beginning of 2010, Peters Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company’s products:
Theoretical annual capacity 2,000
Actual production 1,800
Production hours available 500
Actual conversion cost per hour $7
15. The theoretical velocity per hour is
a. 4.0 units.
b. 3.6 units.
c. 1.1 units.
d. 1.0 units.
16. An example of a prevention cost is
a. field testing.
b. quality audits.
d. repair costs.
17. Warranty work is a(n)
a. external failure cost.
b. internal failure cost.
c. appraisal cost.
d. prevention cost.
At the beginning of the year, Andrew Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
Preceding Year Current Year
Sales $2,400,000 $2,400,000
Quality training 30,000 48,000
Material inspections 7,000 8,000
Scrap 48,000 30,000
Rework 60,000 48,000
Product inspection 10,000 12,000
Product warranty 36,000 24,000
18. For the current year, prevention costs are what percentage of sales?
19. Which of the following is NOT an example of a decision-making context when using quality cost information?
a. strategic pricing
b. flexible budget analysis
c. cost-volume-profit analysis
d. none of the above
20. _______________ is a predetermined amount of defective product that a company permits to be sold.
a. Acceptable quality level
b. Taguchi quality loss function
c. Zero defects
21. The productivity ratio used as a partial operational productivity measure is calculated as follows:
22. _______________ is an assessment of productive efficiency for all inputs combined.
a. Price recovery component
b. Profile measurement
c. Profit-linked productivity measurement
d. Total productivity measurement
Information about Jones Corporation is as follows:
Output (units) 120,000 130,000
Materials (pounds) 37,500 40,000
Materials (per pound) $4 $6
23. What is the partial operational productivity measure for materials for 2009?
24. What is the partial operational productivity measure for materials for 2010?
Information about Cheng Corporation is as follows:
Output (units) 14,000 15,000
Selling price per unit $16 $16
Materials (pounds) 1,750 1,900
Labor (hours) 1,400 1,525
Materials (per pound) $3 $4
Labor (per hour) $6 $7
25. By how much did profits change as a result of changes in productivity related to materials?
a. $600 decrease
b. $600 increase
c. $100 decrease
d. $100 increase
SECTION II ()
1. Prior to installing a JIT system, Johnson Company used machine hours to assign maintenance costs to its three products of 4-inch, 6-inch, and 8-inch plastic pipe.
The maintenance costs totaled $540,000 per year. The machine hours used by each product and the quantity produced of each product are as follows:
Machine Hours Quantity Produced
4-inch 10,000 3,750 rolls
6-inch 14,000 4,000 rolls
8-inch 21,000 5,000 rolls
After installing JIT, three manufacturing cells were created, and the cell workers were trained to perform maintenance. Maintenance costs for the three cells still totaled $540,000; however, these costs are now traceable to each cell.
Cell, 4-inch $ 90,000
Cell, 6-inch 160,000
Cell, 8-inch 290,000
a. Compute the maintenance cost per roll for each type of pipe before JIT is installed.
b. Compute the maintenance cost per roll for each type of pipe after JIT is installed.
c. Explain why the JIT maintenance cost per roll is more accurate than the cost per roll using the traditional approach.
2. Gibson, Inc., has developed ideal standards for four activities: labor, materials, inspection, and receiving.
Information is as follows:
Activity Activity Driver SQ AQ SP
Labor Hours 500 550 $ 32
Materials Pounds 2,000 2,500 48
Inspection Inspection hours 0 375 22
Receiving Orders 60 75 800
The actual prices paid per unit of each activity driver were equal to the standard prices.
Complete the following cost report.
Activity Value-Added Non-value-Added Actual
Labor $_____________ $_____________ $____________
Materials _____________ _____________ ____________
Inspection _____________ _____________ ____________
Receiving _____________ _____________ ____________
Totals $_____________ $_____________ $____________
3 Marshek Industries has the theoretical capability to produce 119,000 units per month but currently produces 102,000 units. The conversion cost for the month is $3,750,000. There are 8,500 production hours available within the plant per month. In addition to processing time, to produce a unit takes 15 minutes of move time and 10 minutes of wait time.
1. Compute the theoretical and actual velocities per hour
2. Compute the theoretical and actual cycle times (minutes per unit produced)
3. Compute the MCE
4. At the beginning of the year, John Corporation initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
2007 2008 2009 2010
Reilability engineering 8,000 10,000 15,000 25,000
Quality training 1,000 2,000 5,000 8,000
Packaging inspections 2,000 3,000 5,000 5,000
Product Acceptance 12,000 10,000 8,000 3,000
Rework 30,000 25,000 18,000 12,000
Reinspection 75,000 65,000 48,000 29,000
Customer complaints 100,000 85,000 62,000 51,000
Warranty and Repair 70,000 50,000 40,000 25,000
a. Prepare a multiple-year trend report for overall costs of quality
b. Prepare a multiple-year trend report for each category of quality costs
5. At the end of 2009, Wilson Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2010, the president of the company wants an assessment of the changes on the company’s productivity. The data needed for the assessment are as follows:
Output 20,000 24,000
Output prices $20 $20
Materials (lbs.) 16,000 16,800
Materials unit price $6 $8
Labor (hrs.) 10,000 9,600
Labor rate per hour $10 $10
Power (kwh) 4,000 6,000
Price per kwh $2 $3
a. Compute the partial operational measures for each input for both 2009 and 2010. What can be said about productivity improvement?
b. Prepare an income statement for each year and calculate the total change in profits.
c. Calculate the profit-linked productivity measure for 2010. What can be said about the productivity program?
d. Calculate the price-recovery component. What does this tell you?
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