Question 1

Costs incurred to reduce or eliminate pollution are commonly known as:

Accepted Answer

A) monitoring costs. 
B) abatement costs. 
C) on-site remediation costs. 
D) off-site remediation costs. 
E) opportunity costs. 
A) monitoring costs. 
B) abatement costs. 
C) on-site remediation costs. 
D) off-site remediation costs. 
E) opportunity costs.

Question 2

To improve its manufacturing cycle efficiency, companies should strive toward increasing __________ time as a percentage of processing time + inspection time + waiting time + move time. The blank is:

Accepted Answer

A) processing time 
B) lead time 
C) waiting time 
D) move time 
E) inspection time 
A) processing time 
B) lead time 
C) waiting time 
D) move time 
E) inspection time

Question 3

Under JIT purchasing, ordering costs are most likely to be minimized by:

Accepted Answer

A) increasing the number of vendors. 
B) making more frequent payments. 
C) increasing the number of inspections. 
D) eliminating inspections. 
E) ordering in large quantities. 
A) increasing the number of vendors. 
B) making more frequent payments. 
C) increasing the number of inspections. 
D) eliminating inspections. 
E) ordering in large quantities.

Question 4

Under the contemporary view of product quality, companies should strive to:

Accepted Answer

A) balance failure costs with the sum of prevention and appraisal costs. 
B) increase total quality costs. 
C) achieve zero defects in manufacturing. 
D) inspect after-the-fact rather than install a series of preventative manufacturing controls. 
E) operate at the top of the total quality cost curve. 
A) balance failure costs with the sum of prevention and appraisal costs. 
B) increase total quality costs. 
C) achieve zero defects in manufacturing. 
D) inspect after-the-fact rather than install a series of preventative manufacturing controls. 
E) operate at the top of the total quality cost curve.

Question 5

Following a strategy of product differentiation, Rumsen Tools Corp. makes a hand sander sold in hardware stores. Rumsen presents the following data for the years 2011 and 2012: $\begin{array} { | l | r | r | } 
\hline & \mathbf { 2 0 1 1 } & \mathbf { 2 0 1 2 } \
\hline \text { Units started } & \$ 11,000 & \$ 11,500 \
\hline \text { Selling price } & \$ 200 & \$ 210 \
\hline \text { Direct materials cost per square foot } & \$ 40,000 & \$ 40,750 \
\hline \text { Direct materials square feet } & 7 & 10 \
\hline \text { Manufacturing capacity (units) } & 13,500 & 13,500 \
\hline \text { Total conversion costs } & \$ 3,500,000 & \$ 377,500 \
\hline \text { Conversion costs per unit of capacity } & \$ 30 & \$ 32 \
\hline \text { Selling and customer service capacity (mumber of customers) } & 20 & 19 \
\hline \text { Total selling and customer service costs } & \$ 80,000 & \$ 80,625 \
\hline \text { Cost per customer of selling and customer service capacity } & \$ 4,000 & \$ 4,125 \
\hline
\end{array}$ Rumsen produces no defective units but it wants to reduce the direct materials usage per hand sanderin 2012. Manufacturing conversion costs in each year depend upon production capacity defined in terms of the number of units that can be produced. Selling and customer-service costs depend upon the number of customers that the customer and service functions are designed to support. Rumsen had 33 customers in 2011 and 35 customers in 2011. The industry market size for hand sanders had increased by 7% from 2011 to 2012. Which of the following is a measure of the learning and growth perspective?

Accepted Answer

A) Operating income growth from charging higher profit margins for hand sanders. 
B) Market share in the hand sander market. 
C) Order delivery time. 
D) Improving manufacturing processes. 
E) Increased customer satisfaction. 
A) Operating income growth from charging higher profit margins for hand sanders. 
B) Market share in the hand sander market. 
C) Order delivery time. 
D) Improving manufacturing processes. 
E) Increased customer satisfaction.

Question 6

For what purpose is the theory of constraints used?

Accepted Answer

A) To reduce product defects. 
B) To balance performance measurement 
C) To identify and manage organizational bottlenecks. 
D) To reduce inventory levels. 
E) To seek best practices by comparing existing methods and performance levels with those of other organizations. 
A) To reduce product defects. 
B) To balance performance measurement 
C) To identify and manage organizational bottlenecks. 
D) To reduce inventory levels. 
E) To seek best practices by comparing existing methods and performance levels with those of other organizations.

Question 7

Which of the following choices best describes warranty costs and the cost of lost customer sales respectively?

Accepted Answer

A) Internal failure cost, external failure cost. 
B) Prevention cost, external failure cost. 
C) Prevention cost, internal failure cost. 
D) External failure cost, internal failure cost. 
E) External failure cost, external failure cost. 
A) Internal failure cost, external failure cost. 
B) Prevention cost, external failure cost. 
C) Prevention cost, internal failure cost. 
D) External failure cost, internal failure cost. 
E) External failure cost, external failure cost.

Question 8

Manhattan Mills Corp. has identified the following selected quality costs:
▪ Warranty costs: $80,000
▪ Employee training: $30,000
▪ Repair of units prior to shipment to customers: $15,000
▪ Quality engineering: $70,000
▪ Product inspection during manufacturing: $40,000
▪ Travel to customer sites to perform repairs: $8,000
Required:
A. Compute the company's prevention, appraisal, internal failure, and external failure costs.
B. Does a "hidden" quality cost sometimes occur when bad units enter the marketplace? Briefly explain.
C. Which of the following could have greater negative ramifications for Manhattan Mills: $100,000 of internal failure costs or $100,000 of external failure costs? Why?

Accepted Answer

A. Prevention: Training ($30,000) + qual

Question 9

Following a strategy of product differentiation, Janzen Inc. makes a high-end product entitled "40H.". Janzen Inc. presents the following data for the years 2011 and 2012: $\begin{array} { l r r } 
& \mathbf { 2 0 1 1 } & \mathbf { 2 0 1 2 } \
\text { Units of } 40 \mathrm { H } \text { started } & \$ 21,000 & \$ 22,000 \
\text { Selling price } & \$ 300 & \$ 320 \
\text { Direct materials cost per square foot } & \$ 50,000 & \$ 51,500 \
\text { Direct materials square feet } & 30 & 32 \
\text { Manufacturing capacity for } 40 \mathrm { H } \text { (units) } & 30,000 & 30,000 \
\text { Total conversion costs } & \$ 1,500,000 & \$ 1,600,000 \
\text { Conversion costs per unit of capacity } & \$ 30 & \$ 34 \
\text { Selling and customer service capacity (number of customers) } & 70 & 68 \
\text { Total selling and customer service costs } & \$ 460,000 & \$ 462,500 \
\text { Cost per customer of selling and customer service capacity } & \$ 7,000 & \$ 7,250
\end{array}$ Janzen Inc. produces no defective units but it wants to reduce the direct materials usage per unit of 40H in 2012. Manufacturing conversion costs in each year depend upon production capacity defined in terms of the number of 40H units that can be produced. Selling and customer-service costs depend upon the number of customers that the customer and service functions are designed to support. Janzen Inc. had 55 customers in 2011 and 62 customers in 2012. The industry market for 40H units increased by 6% from 2011 to 2012. Which of the following is a measure of the internal business perspective?

Accepted Answer

A) Operating income growth from charging higher profit margins for 40H. 
B) Market share in the 40H market. 
C) Order delivery time. 
D) Improving manufacturing processes. 
E) Number of employees trained in quality management. 
A) Operating income growth from charging higher profit margins for 40H. 
B) Market share in the 40H market. 
C) Order delivery time. 
D) Improving manufacturing processes. 
E) Number of employees trained in quality management.

Question 10

Vernon Enterprises has identified the following as having an impact on the company's quality costs:
1. Inspection of manufactured goods on assembly line
2. Warranty repairs
3. Employee training
4. Quality engineering/design
5. Units repaired at customers' site
6. Product testing
7. Customer complaints
8. Product liability
9. Rework of defective goods before transfer to finished goods
10. Preventive maintenance for equipment
11. Evaluation of suppliers
Required:
A. Classify the eleven costs as prevention, appraisal, internal failure, or external failure.
B. Briefly contrast the objective of traditional quality control and contemporary quality control.

Accepted Answer

A.
@#LAT-DLM&

B. The traditional view holds that

Question 11

Winston Company manufactures hand held calculators in their Mississauga, Ontario plant. When calculating manufacturing cycle efficiency, which of the following activities does not result in value-added time for Winston?

Accepted Answer

A) Moving. 
B) Processing. 
C) Inspection. 
D) Waiting. 
E) Training. 
A) Moving. 
B) Processing. 
C) Inspection. 
D) Waiting. 
E) Training.

Question 12

The costs that follow appeared on the quality cost report of Big Beez Company: $\begin{array} { | l | r | } 
\hline \text { Quality training } & \$ 60,000 \
\hline \text { Customer complaints } & 7,000 \
\hline \text { Warranty costs } & 20,000 \
\hline \text { Production stoppages from machine breakdowns } & 9,000 \
\hline \text { Raw-materials inspection } & 12,000 \
\hline
\end{array}$ The sum of Big Beez's prevention and external failure costs is:

Accepted Answer

A) $80,000. 
B) $87,000. 
C) $92,000. 
D) $99,000. 
E) $108,000. 
A) $80,000. 
B) $87,000. 
C) $92,000. 
D) $99,000. 
E) $108,000.

Question 13

Clean-up costs are commonly classified as:

Accepted Answer

A) monitoring costs. 
B) abatement costs. 
C) remediation costs. 
D) internal failure costs. 
E) external failure costs. 
A) monitoring costs. 
B) abatement costs. 
C) remediation costs. 
D) internal failure costs. 
E) external failure costs.

Question 14

Which of the following choices correctly depicts a prevention cost and an external failure cost respectively?

Accepted Answer

A) Customer complaints, reliability engineering. 
B) Quality training, product liability lawsuits 
C) Inspection of work-in-process, product liability lawsuits. 
D) In-house rework of defective units, transportation costs to customer sites. 
E) Inspection of work-in-process, warranty costs. 
A) Customer complaints, reliability engineering. 
B) Quality training, product liability lawsuits 
C) Inspection of work-in-process, product liability lawsuits. 
D) In-house rework of defective units, transportation costs to customer sites. 
E) Inspection of work-in-process, warranty costs.

Question 15

Which measure of performance does not typically relate to customer satisfaction?

Accepted Answer

A) Number of customer complaints received per month. 
B) Average time to answer telephone calls from customers. 
C) New services provided for the benefit of customers. 
D) Revenue growth percentage. 
E) Number of customer suggestions accepted. 
A) Number of customer complaints received per month. 
B) Average time to answer telephone calls from customers. 
C) New services provided for the benefit of customers. 
D) Revenue growth percentage. 
E) Number of customer suggestions accepted.

Question 16

The EOQ model is a mathematical tool for:

Accepted Answer

A) determining the order quantity that minimizes the costs of holding inventory. 
B) determining the order quantity that minimizes the costs of ordering inventory. 
C) determining the order quantity that maximizes the costs of holding inventory. 
D) determining the order quantity that maximizes the costs of ordering and holding inventory. 
E) determining the order quantity that minimizes the costs of ordering and holding inventory. 
A) determining the order quantity that minimizes the costs of holding inventory. 
B) determining the order quantity that minimizes the costs of ordering inventory. 
C) determining the order quantity that maximizes the costs of holding inventory. 
D) determining the order quantity that maximizes the costs of ordering and holding inventory. 
E) determining the order quantity that minimizes the costs of ordering and holding inventory.

Question 17

Paralogic Corp. produces two microchips that are popular in the with laptop computer manufacturers: Model A and Model $\begin{array}{lccc}
 \text { Warranty repair costs } & \$ 200,000 \
\text { Reliability engineering } & 400,000 \
\end{array}$

$\begin{array}{|l|r|}

\hline \text { Rework at Paralogic's manufacturing plant } & 80,000 \
\hline \text { Manufacturing inspection } & 50,000 \
\hline \begin{array}{l}
\text { Transportation costs to customer sites to fix } \
\text { problems }
\end{array} & 25,000 \
\hline \text { Quality traming for employees } & 80,000 \
\hline
\end{array}$ Quality cost reports revealed the following about Model B: $\begin{array}{lr}
\text { Prevention costs } & 82.3 \% \
\text { Appraisal costs } & 4.7 \% \
\text { Internal failure costs } & 6.0 \% \
\text { External failure costs } & 7.0 \% \
\text { Total quality costs } & 100.0 \%
\end{array}$ Finally, the company's accounting department reported that the percentage of sales revenues consumed by quality costs is lower for Model B than for Model A.
Required:
A. Classify the costs that relate to Model A as prevention, appraisal, internal failure, or external failure.
B. Using your answer in requirement "A," compute prevention, appraisal, internal failure, and external failure costs as a percentage of Model A's total quality costs.
C. Comment on your findings, noting whether the company is "investing" its quality expenditures differently for the two synthesizers.

Accepted Answer

A. Warranty repair costs External failur

Question 18

Following a strategy of product differentiation, Janzen Inc. makes a high-end product entitled "40H". Janzen Inc. presents the following data for the years 2011 and 2012: $\begin{array} { l r r } 
& \mathbf { 2 0 1 1 } & \mathbf { 2 0 1 2 } \
\text { Units of } 40 \mathrm { H } \text { started } & \$ 21,000 & \$ 22,000 \
\text { Selling price } & \$ 300 & \$ 320 \
\text { Direct materials cost per square foot } & \$ 50,000 & \$ 51,500 \
\text { Direct materials square feet } & 30 & 32 \
\text { Manufacturing capacity for } 40 \mathrm { H } \text { (units) } & 30,000 & 30,000 \
\text { Total conversion costs } & \$ 1,500,000 & \$ 1,600,000 \
\text { Conversion costs per unit of capacity } & \$ 30 & \$ 34 \
\text { Selling and customer service capacity (number of customers) } & 70 & 68 \
\text { Total selling and customer service costs } & \$ 460,000 & \$ 462,500 \
\text { Cost per customer of selling and customer service capacity } & \$ 7,000 & \$ 7,250
\end{array}$ Janzen Inc. produces no defective units but it wants to reduce the direct materials usage per unit of 40H in 2012. Manufacturing conversion costs in each year depend upon production capacity defined in terms of the number of 40H units that can be produced. Selling and customer-service costs depend upon the number of customers that the customer and service functions are designed to support. Janzen Inc. had 55 customers in 2011 and 62 customers in 2012. The industry market for 40H units increased by 6% from 2011 to 2012. Which of the following is a measure of the learning and growth perspective?

Accepted Answer

A) Operating income growth from charging higher profit margins for 40H. 
B) Market share in the 40H market. 
C) Order delivery time. 
D) Improving manufacturing processes. 
E) Increased customer satisfaction. 
A) Operating income growth from charging higher profit margins for 40H. 
B) Market share in the 40H market. 
C) Order delivery time. 
D) Improving manufacturing processes. 
E) Increased customer satisfaction.

Question 19

Following a strategy of product differentiation, Rumsen Tools Corp. makes a hand sander sold in hardware stores. Rumsen presents the following data for the years 2011 and 2012: $\begin{array} { | l | r | r | } 
\hline & \mathbf { 2 0 1 1 } & \mathbf { 2 0 1 2 } \
\hline \text { Units started } & \$ 11,000 & \$ 11,500 \
\hline \text { Selling price } & \$ 200 & \$ 210 \
\hline \text { Direct materials cost per square foot } & \$ 40,000 & \$ 40,750 \
\hline \text { Direct materials square feet } & 7 & 10 \
\hline \text { Manufacturing capacity (units) } & 13,500 & 13,500 \
\hline \text { Total conversion costs } & \$ 3,500,000 & \$ 377,500 \
\hline \text { Conversion costs per unit of capacity } & \$ 30 & \$ 32 \
\hline \text { Selling and customer service capacity (mumber of customers) } & 20 & 19 \
\hline \text { Total selling and customer service costs } & \$ 80,000 & \$ 80,625 \
\hline \text { Cost per customer of selling and customer service capacity } & \$ 4,000 & \$ 4,125 \
\hline
\end{array}$ Rumsen produces no defective units but it wants to reduce the direct materials usage per hand sanderin 2012. Manufacturing conversion costs in each year depend upon production capacity defined in terms of the number of units that can be produced. Selling and customer-service costs depend upon the number of customers that the customer and service functions are designed to support. Rumsen had 33 customers in 2011 and 35 customers in 2011. The industry market size for hand sanders had increased by 7% from 2011 to 2012. Which of the following is a measure of the customer perspective?

Accepted Answer

A) Operating income growth from charging higher profit margins for Product X2GB. 
B) Yield. 
C) Order delivery time. 
D) Improving manufacturing processes. 
E) Market share in the Product X2GB market. 
A) Operating income growth from charging higher profit margins for Product X2GB. 
B) Yield. 
C) Order delivery time. 
D) Improving manufacturing processes. 
E) Market share in the Product X2GB market.

Question 20

Which of the following fails to be captured and reported by a company's accounting system as an environmental cost?

Accepted Answer

A) Monitoring costs. 
B) Abatement costs. 
C) Opportunity costs. 
D) On-site remediation costs. 
E) Off-site remediation costs. 
A) Monitoring costs. 
B) Abatement costs. 
C) Opportunity costs. 
D) On-site remediation costs. 
E) Off-site remediation costs.

Costs incurred to reduce or eliminate pollution are commonly known as:

To improve its manufacturing cycle efficiency, companies should strive toward increasing __________ time as a percentage of processing time + inspection time + waiting time + move time. The blank is:

Under JIT purchasing, ordering costs are most likely to be minimized by:

Under the contemporary view of product quality, companies should strive to:

For what purpose is the theory of constraints used?

Which of the following choices best describes warranty costs and the cost of lost customer sales respectively?

Winston Company manufactures hand held calculators in their Mississauga, Ontario plant. When calculating manufacturing cycle efficiency, which of the following activities does not result in value-added time for Winston?

The costs that follow appeared on the quality cost report of Big Beez Company: Quality training \ 60,000 Customer complaints 7,000 Warranty costs 20,000 Production stoppages from machine breakdowns 9,000 Raw-materials inspection 12,000 The sum of Big Beez's prevention and external failure costs is:

Clean-up costs are commonly classified as:

Which of the following choices correctly depicts a prevention cost and an external failure cost respectively?

Which measure of performance does not typically relate to customer satisfaction?

The EOQ model is a mathematical tool for:

Which of the following fails to be captured and reported by a company's accounting system as an environmental cost?

The Changing Role of Managerial Accounting

Basic Cost Management Concepts

Product Costing and Cost Accumulation

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behaviour, and Cost Estimation

Cost-Volume-Profit Analysis, Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing and Flexible Budgeting

Responsibility Accounting, Investment Centres, and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

Filters

Exam 10: Cost Management Tools

Costs incurred to reduce or eliminate pollution are commonly known as:

To improve its manufacturing cycle efficiency, companies should strive toward increasing __________ time as a percentage of processing time + inspection time + waiting time + move time. The blank is:

Under JIT purchasing, ordering costs are most likely to be minimized by:

Under the contemporary view of product quality, companies should strive to:

For what purpose is the theory of constraints used?

Which of the following choices best describes warranty costs and the cost of lost customer sales respectively?

Winston Company manufactures hand held calculators in their Mississauga, Ontario plant. When calculating manufacturing cycle efficiency, which of the following activities does not result in value-added time for Winston?

The costs that follow appeared on the quality cost report of Big Beez Company: Quality training \ 60,000 Customer complaints 7,000 Warranty costs 20,000 Production stoppages from machine breakdowns 9,000 Raw-materials inspection 12,000 The sum of Big Beez's prevention and external failure costs is:

Clean-up costs are commonly classified as:

Which of the following choices correctly depicts a prevention cost and an external failure cost respectively?

Which measure of performance does not typically relate to customer satisfaction?

The EOQ model is a mathematical tool for:

Which of the following fails to be captured and reported by a company's accounting system as an environmental cost?

The Changing Role of Managerial Accounting

Basic Cost Management Concepts

Product Costing and Cost Accumulation

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behaviour, and Cost Estimation

Cost-Volume-Profit Analysis, Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing and Flexible Budgeting

Responsibility Accounting, Investment Centres, and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

Filters