Exam 19: Balanced Scorecard: Quality and Time

The amount of time from when an order is ready to start on the production line to when it becomes a finished good is referred to as ________.

Cysco Corp has a budget of $1,207,000 in 2017 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $106,000 in variable costs. The new method will require $50,200 in training costs and $143,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 201,000 units. Appraisal costs for the year are budgeted at $503,000. The new prevention procedures will save appraisal costs of $50,600. Internal failure costs average $34 per failed unit of finished goods. The internal failure rate is expected to be 6% of all completed items. The proposed changes will cut the internal failure rate by one-half. Internal failure units are destroyed. External failure costs average $58 per failed unit. The company's average external failures average 2.5% of units sold. The new proposal will reduce this rate to 2%. Assume all units produced are sold and there are no ending inventories. How much will appraisal costs change assuming that the new prevention methods reduce material failures by 40% in the appraisal phase?

Any factor where a change in the factor causes a change in the speed with which an activity is undertaken is referred to as ________.

Brix, Inc., prepares frozen food for fast-food restaurants. It has two workstations, cooking and assembly. The cooking station is limited by the cooking time of the food. Assembly is limited by the speed of the workers. Assembly normally waits on food from cooking. Because the demand has increased in recent months to 2,800 dozen units, management is considering adding another cooking station or else having the cooks start to work earlier. The monthly cost of operating the cooking station one more hour each day is $2,400. The cost of adding another cooking station would add an average of $10 per hour. The current operating hours total eight hours a day, 22 days a month. The contribution margin of the finished products is currently $8 per dozen. Inventory carrying costs average $2.00 per dozen per month. Either the extra hour or the new cooking station would increase production by 20 dozen a day, with a long-run increase of 80 dozen units in finished goods inventory to 280 dozen. Required: a.What is the total production per month if the change is made? b.What is the increase in the expected monthly product contribution for each of the possible changes? Assume long-run production equals sales.

Which of the following is an internal-business-process measure to study the output during bottleneck situations?

Nonfinancial measures are ineffective at helping managers evaluate how well they have done on goals such as improving manufacturing cycle times and customer response times.

A time driver is any factor that causes a change in the speed of an activity when the factor changes.

In the banking industry, depositing a customer's check into the wrong bank account is an example of quality of design failure.

Appraisal costs are costs incurred to preclude the production of products that do not conform to specifications.

Manufacturing lead time is the sum of waiting time and manufacturing time for an order.

Which of the following is true of COQ measures?

Relevant-cost and relevant-revenue analysis uses the allocated costs as the base for calculating the costs of a quality improvement program.

Which of the following correctly describes manufacturing cycle time?

One way to increase capacity is to reduce the time it takes for setups and processing.

Ventaz Corp manufactures keyboards. The manufacturing cycle efficiency is 40%. What is its manufacturing time for value added if the manufacturing lead time is 132 minutes per keyboard?

An advantage of nonfinancial measures of quality include that they ________.

Quality is defined as the total features and characteristics of a product or a service made or performed according to specifications to satisfy customers at the time of purchase and during use.

Which of the following is a graph of a series of successive observations of a particular step, procedure, or operation taken at regular intervals of time?

LaCrosse Products has a budget of $907,000 in 2017 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $80,700 in variable costs. The new method will require $40,200 in training costs and $102,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 155,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $50,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 2% of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company's average external failures average 2% of units sold. The new proposal will reduce this rate by 45%. Assume all units produced are sold and there are no ending inventories. How much will internal failure costs change if the internal product failures are reduced by 1/3 with the new procedures? (Do not round intermediate calculations.)

Discuss the means by which a company goes about evaluating and installing a new quality improvement program.