Exam 21: Strategic Cost Management

The word "Kaizen" is Japanese for:

The major source of information for the activity cost management system is

At the beginning of the year, Randy 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: Freceding Year Current Year Sales £5,000,000 £5,000,000 Quality training 6,000 9,000 Material inspections 15,000 12,000 Scrap 80,000 60,000 Rework 15,000 12,000 Product inspection 25,000 30,000 Product warranty 150,000 120,000 a.Compute each category of quality costs as a percentage of sales for each year.Prevention costsAppraisal costsInternal failure costsExternal failure costs b.How much has profit increased as a result of quality improvements? c.If quality costs can be reduced to 2.5 per cent of sales, how much additional profit would result?

Figure 21-7 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: Freceding 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 -Refer to Figure 21-7. For the current year, prevention costs are what percentage of sales?

A time-and-motion study revealed that it should take 2 hours to produce a product that currently takes 6 hours to produce. Labour is £8 per hour. The nonvalue-added costs are

Which of the following describes a kaizen cost reduction process?

At the end of the current year, Sugarbaker Ltd.collected the following data about its quality program: Sales (50,000\times£40) £2,000,000 Training program 24,000 Rework 80,000 Scrap 60,000 Warranty repairs 80,000 Complaints 40,000 Inspection labour 50,000 Test labour 60,000 Supplier evaluation 6,000 Required: Prepare a quality cost report by quality cost category.

Figure 21-5 At the beginning of this year, Sammie Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company's products: Current Year Theoretical annual capacity 2,000 Actual production 1,800 Production hours available 1,000 Scrap (kgs) 200 Materials used (kgs) 6,400 Actual cost per unit 14 Days of inventory 3 Number of defective units 30 -Refer to Figure 21-5. Sammie's defective units as a percentage of total units produced would be

How can JIT avoid shutdowns?

Figure 21-1 A company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average £4,000 per day. A competitor keeps 10 days of inventory on hand, and the competitor's carrying costs average £2,000 per day. -Refer to Figure 21-2. The value-added costs would be

Which of the following is NOT an expected outcome of activity analysis?

Which of the following is a value-added activity?

Figure 21-1 A company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average £4,000 per day. A competitor keeps 10 days of inventory on hand, and the competitor's carrying costs average £2,000 per day. -Refer to Figure 21-1. The value-added costs are

Using the abbreviations listed below, indicate for each of the costs whether the cost should be classified as: = Prevention = Detection = Internal Falure = External Failure = None of the above 1. Inspecting products and processes 2. Verifying supplier environmental performance 3. Testing for contamination 4. Obtaining ISO 14001 certification 5. Carrying out environmental studies 6. Operating pollution control equipment 7. Cleaning up a polluted lake 8. Recycling scrap 9. Recycling products 10. Cleaning up oil spills

At the beginning of the year, Ball 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 £5,000,000 £5,000,000 Quality training 22,500 25,000 Material inspections 50,000 80,000 Scrap 250,000 225,000 Product warranty 450,000 400,000 Rework 375,000 300,000 Product inspection 100,000 100,000 a.Compute each category of quality costs as a percentage of sales for each year.Prevention costsAppraisal costsInternal failure costsExternal failure costs b.How much has profit increased as a result of quality improvements? c.If quality costs can be reduced to 2.5 per cent of sales, how much additional profit would result?

Which of the following is NOT a detection activity?

____ is an effort to reduce costs of existing products and processes.

Costs incurred because products or services fail to meet requirements after delivery to customers are called

Which of the following process dimensions of the activity-based management model deals with "what"?

Which of the following is NOT a necessary condition for classification as a value-added activity?