Exam 11: Strategic Cost Management

Alana Rodriguez has decided to purchase a Multi-Function Printer. She has narrowed the choice to two: Brand A and Brand B. Both brands have the same features and transmitting speed and use the same type of paper. Both come from companies with good reputations. The selling price for each is identical. After some review, Alana discovers that the cost of operating and maintaining Brand A over a three-year period is estimated to be $300. For Brand B, the operating and maintenance cost is $150. The sales agent for Brand B emphasizes the lower operating and maintenance cost. She claims that it is lower than any other Printer. In addition, she provides Alana with a copy of an article appearing in a PC magazine that rates service performance of various Printers. Brand B is rated number one. Required: a. Which brand should Alana buy? Why? b. What is the total product purchased by Alana? c. What does it mean to obtain a competitive advantage? What role does the cost management system play in helping to achieve this goal?

The operational activity of assembling parts is an example of a

The last link of the internal value chain is

analysis relies on identifying and exploiting internal and external linkages.

Prior to installing a JIT system, Plasticize Company used machine hours to assign maintenance costs to its three products of 3-inch, 5-inch, and 7-inch plastic tubing. The maintenance costs totaled $120,000 per year. The machine hours used by each product and the quantity produced of each product are as follows: 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 $120,000; however, these costs are now traceable to each cell. Required: a. Compute the maintenance cost per roll for each type of tubing before JIT is installed. b. Compute the maintenance cost per roll for each type of tubing after JIT is installed. c. Explain why the JIT maintenance cost per roll is more accurate than the cost per roll using the traditional approach.

Figure 11-2 Blue Vibrance Company sells a product used in many manufacturing processes. The sales activity involves three activity areas: Activity Area Cost Driver and Rate Order taking $100 per purchase order Sales visits $50 per visit Delivery vehicles $1 per delivery mile The following customer information is given: -Refer to Figure 11-2. Which customer has the least activity costs?

A firm that has implemented JIT had the following transactions: 1) Materials were purchased on account for $40,000. 2) Materials were placed into production. 3) Actual direct labor costs were $6,000. 4) Actual overhead costs were $40,000. 5) Conversion costs applied were $42,000. 6) All work was completed for the month. 7) All completed work was sold. 8) The variance is recognized. What will be the entry to record material placed into production using the traditional approach?

The operational activity of redesigning products is classified as a

The manufacturing system focused on reducing inventory levels and waste is called manufacturing.

The operational activity of setting up equipment is classified as a

Which of the following is a trait of a traditional manufacturing system?

Which of the following is NOT a stage of the production life-cycle viewpoint?

Choosing alternative strategies that provide long-term growth involves decision making.

Explain the difference between acceptable quality level and total quality control.

MaximumTec has implemented JIT had the following transactions: 1. Materials were purchased on account for $70,000. 2. Materials were placed into production. 3. Actual direct labor costs were $14,000. 4. Actual overhead costs were $50,000. 5. Conversion costs applied were $54,000. 6. All work was completed for the month. 7. All completed work was sold. 8. The variance is recognized. Required: a. Provide the journal entries for the above transactions assuming the traditional approach was used. b. Provide the journal entries for a backflush system assuming the second trigger point is the point when goods are sold.

The total product, the complete range of benefits that a customer receives from a purchased product include(s):

Dot Company sells a product for $225 per unit. Its market share is 20 percent. The marketing manager feels that the market share can be increased to 30 percent with a reduction in price to $195. The product is currently earning a profit of $36 per unit. The president of Dot Company feels that the $36 profit per unit must be maintained. What is the target price per unit?

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

When a computer company maintains the internal storage space for a lower price, it is following a

The length of time that a product serves the needs of customers is called the: