Exam 11: Strategic Cost Management

In JIT purchasing, materials are usually at warehouse long before they are needed.

The structural and executional factors that determine the long-term cost structure of an organization are called:

Zeal Company sells a product for $500 per unit. Its market share is 30 percent. The marketing manager feels that the market share can be increased to 35 percent with a reduction in price to $480. The product is currently earning a profit of $60 per unit. The president of Zeal Company feels that the $60 profit per unit must be maintained. What is the original cost per unit?

Which of the following manufacturing costs is assigned to products in a JIT environment using allocation?

Prior to installing a JIT system, Grindstone Company used machine hours to assign maintenance costs to its three products of 4-inch, 6-inch, and 9-inch insulation. The maintenance costs totaled $432,000 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 5,000 15,000 rolls 6 -inch 12,000 12,500 rolls 9 -inch 7,000 11,200 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 $432,000; however, these costs are now traceable to each cell. Cell, 4-inch \ 125,000 Cell, 6-inch 175,000 Cell, 9-inch 165,000 The maintenance cost per roll of 4-inch insulation before JIT is installed would be

Target costing provides a method for reducing costs by exploiting customer and supplier linkages.

Prior to installing a JIT system, Grindstone Company used machine hours to assign maintenance costs to its three products of 4-inch, 6-inch, and 9-inch insulation. The maintenance costs totaled $432,000 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 5,000 15,000 rolls 6 -inch 12,000 12,500 rolls 9 -inch 7,000 11,200 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 $432,000; however, these costs are now traceable to each cell. Cell, 4-inch \ 125,000 Cell, 6-inch 175,000 Cell, 9-inch 165,000 After installing JIT, the maintenance cost per roll of 6-inch insulation is

When a computer company selects a mix of strategies in order to create sustainable competitive advantage, it is following a

Which of the life-cycle viewpoints is the revenue-oriented viewpoint?

The difference between the sales price needed to capture a predetermined market share and the desired profit per unit is called:

If JIT manufacturing is used and each manufacturing cell produces a single product, all of the following are considered direct product costs EXCEPT

The period of time when sales increase at an increasing rate is called the:

Traditional manufacturing uses which of the following philosophies of quality control?

Analyzing how costs and other financial factors vary as different bundles of activities are considered to strengthen a firm's strategic position is the process of

Which of the following manufacturing costs is assigned to products in a traditional and JIT environment using allocation?

Exploiting customer linkages is not important since customers do not affect profitability.

Which of the following are true about total quality control?

Luminous Company sells a product for $450 per unit. Its market share is 25 percent. The marketing manager feels that the market share can be increased to 33 percent with a reduction in price to $390. The product is currently earning a profit of $72 per unit. The president of Luminous Company feels that the $72 profit per unit must be maintained. What is the target price per unit?

Ambrosia Corp. is a manufacturer of equipment used in manufacturing. It currently produces a product with 30 parts but through redesign has reduced the number of parts to 9. Then current activity capacity and demand for the 30 unit configuration and expected activity demand for the 9 part configuration are provided below: Activities Activity Activity Current Expected Driver Capacity Activity Demand Activity Demand Materials pumber of uarts 300,000 300,000 90,000 Assembly direct labor hours 20,000 20,000 6,000 Purchasing parts orders of 20,000 16,000 8,000 Materials usage has a rate of $6 per part and no fixed costs. Assembly has a rate of $20 per labor hour with no fixed component. Purchasing requires clerks that can process 5,000 purchase orders. Each clerk earns $40,000 per year. There is also a $1 per order processing cost. If 10,000 units are being produced and the sales price is $500, what is the new sales price if the cost savings are passed on to the consumer?

If JIT manufacturing is used and each manufacturing cell produces a single product, which of the following is considered a direct product cost?