Question 1

Which of the following elements in a product's cycle time should be maximized?

Accepted Answer

A) Storage and waiting time. 
B) Processing time. 
C) Movement time. 
D) Inspection time. 
A) Storage and waiting time. 
B) Processing time. 
C) Movement time. 
D) Inspection time.

Question 2

The following are all characteristics of target costing except:

Accepted Answer

A) Understanding the pricing process in order to increase selling prices. 
B) Driving costs down while satisfying customer needs. 
C) Emphasizing the product's functional characteristics and their importance to the customer. 
D) Reducing development time. 
A) Understanding the pricing process in order to increase selling prices. 
B) Driving costs down while satisfying customer needs. 
C) Emphasizing the product's functional characteristics and their importance to the customer. 
D) Reducing development time.

Question 3

Which of the following is not commonly used to measure product quality in a just-in-time system?

Accepted Answer

A) Defects per million. 
B) Merchandise returns. 
C) Manufacturing efficiency ratio. 
D) Warranty claims. 
A) Defects per million. 
B) Merchandise returns. 
C) Manufacturing efficiency ratio. 
D) Warranty claims.

Question 4

In a just-in-time manufacturing system,reliable vendor relationships are essential only if the prices they charge are the lowest possible prices.

Accepted Answer

A) True 
 B)False

Question 5

Value-added activities add to a product's desirability from the manufacturer's perspective.

Accepted Answer

A) True 
 B)False

Question 6

A just-in-time manufacturing system is also known as a supply push system.

Accepted Answer

A) True 
 B)False

Question 7

Activities that increase scrap and rework tend to increase productivity.

Accepted Answer

A) True 
 B)False

Question 8

External failure costs include:

Accepted Answer

A) Inspections of materials. 
B) Training. 
C) Rework. 
D) Repairs. 
A) Inspections of materials. 
B) Training. 
C) Rework. 
D) Repairs.

Question 9

The value chain includes customer service,marketing,and suppliers.

Accepted Answer

A) True 
 B)False

Question 10

Activity-based management is a subset of activity-based costing.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a value-added activity by a manufacturer of chocolate candies?

Accepted Answer

A) The addition of chocolate syrup into the candy mix. 
B) Hiring production workers. 
C) Storing the candy bars until they are distributed to stores. 
D) Managing the cost of electricity by the production department. 
A) The addition of chocolate syrup into the candy mix. 
B) Hiring production workers. 
C) Storing the candy bars until they are distributed to stores. 
D) Managing the cost of electricity by the production department.

Question 12

Target cost equals target price plus profit margin.

Accepted Answer

A) True 
 B)False

Question 13

Internal failure costs happen when an unsatisfactory good or service is delivered to a customer.

Accepted Answer

A) True 
 B)False

Question 14

Pool-Glow,Inc.has developed a new light for lighting swimming pools.After doing market research,it has determined that customers would be willing to pay $140 for this light.Pool-Glow seeks to earn 25% profit on the light.At present,Pool-Glow makes an old style light for $101.25,which sells for $130.
(1.)What must the target cost be in order to earn the 25% profit that the company demands?
(2.)If Pool-Glow can adjust its costs to the target cost,the company estimates that it can sell 50,000 lights.What would Pool-Glow's profit be at this point?
(3.)How many of the old style lights would have to be sold to reach the same profit?

Accepted Answer

(1)$140 × 0.25 = $35 = profit; Cost = $1

Question 15

Examples of value-added activities include all of the following except:

Accepted Answer

A) Product design. 
B) Assembly activities. 
C) Machinery set-up activities. 
D) Establishing efficient distribution channels. 
A) Product design. 
B) Assembly activities. 
C) Machinery set-up activities. 
D) Establishing efficient distribution channels.

Question 16

"Six Sigma" describes the length of time it takes a product to pass through the 6 stages of manufacturing,from processing through inspection.

Accepted Answer

A) True 
 B)False

Question 17

Accounting terminology
Listed below are eight technical accounting terms introduced or emphasized in this chapter:   Each of the following statements may (or may not)describe one of these technical terms.In the space provided below each statement,indicate the accounting term described,or answer "None" if the statement does not correctly describe any of the terms.
_____ (a)The process of using activity-based costs to help reduce or eliminate non-value-added activities.
_____ (b)Can be eliminated without affecting the desirability of the product from the perspective of the customer.
_____ (c)The length of time for a product to pass completely through a specific manufacturing process.
_____ (d)If eliminated,the desirability of the product to consumers is decreased.
_____ (e)Consideration of all potential resources that will be consumed by a product from development through disposal.
_____ (f)A method in which a product's cost is determined by subtracting a fixed profit margin from its selling price.
_____ (g)An approach that explicitly monitors quality costs and rewards quality enhancing behavior.

Accepted Answer

(a)Activity-based management (

Question 18

The basic approach of just-in-time inventory systems is to try to eliminate inefficiency and to improve product quality.

Accepted Answer

A) True 
 B)False

Question 19

Identifying value-added activities
Pomme Farms operates an apple cider press.The production of cider involves the following activities:
(1.)Inspect incoming shipments of apples.
(2.)Store apples in adjacent barn until needed.
(3.)Transport apples from storage barn to the press building.
(4.)Load apples onto the conveyor leading to the press.
(5.)Run press.
(6.)Fill bottles with completed cider.
(7.)Dispose of waste from press.
(8.)Store filled bottles until sale.
Requirements:
(a.)Identify Pomme's value-added activities.
(b.)Identify any non-value added activities performed by Pomme.

Accepted Answer

(a)Value-added activities would include:

Question 20

Target costing is directed toward:

Accepted Answer

A) Increasing the activity costs associated with existing products. 
B) Identifying the amount by which the costs of existing products must be reduced to achieve a target profit margin. 
C) The creation and design of products that will provide adequate profits. 
D) The improvement of existing production processes by eliminating non-value adding activities. 
A) Increasing the activity costs associated with existing products. 
B) Identifying the amount by which the costs of existing products must be reduced to achieve a target profit margin. 
C) The creation and design of products that will provide adequate profits. 
D) The improvement of existing production processes by eliminating non-value adding activities.

Exam 19: Costing and the Value Chain

Which of the following elements in a product's cycle time should be maximized?

The following are all characteristics of target costing except:

Which of the following is not commonly used to measure product quality in a just-in-time system?

In a just-in-time manufacturing system,reliable vendor relationships are essential only if the prices they charge are the lowest possible prices.

Value-added activities add to a product's desirability from the manufacturer's perspective.

A just-in-time manufacturing system is also known as a supply push system.

Activities that increase scrap and rework tend to increase productivity.

External failure costs include:

The value chain includes customer service,marketing,and suppliers.

Activity-based management is a subset of activity-based costing.

Which of the following is a value-added activity by a manufacturer of chocolate candies?

Target cost equals target price plus profit margin.

Internal failure costs happen when an unsatisfactory good or service is delivered to a customer.

Examples of value-added activities include all of the following except:

"Six Sigma" describes the length of time it takes a product to pass through the 6 stages of manufacturing,from processing through inspection.

The basic approach of just-in-time inventory systems is to try to eliminate inefficiency and to improve product quality.

Target costing is directed toward:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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