Question 1

Which of the following is a possible cause of a firm's reluctance to implement activity-based management (ABM) ?
I Employee resistance to change
Ii) Lack of understanding of the benefits of ABM.
Iii) Significant resources required.iv.Focus is on value-added activities.

Accepted Answer

A)   i,ii and iii
B)   i,ii and iv
C)   ii,iii and iv
D)   i,iii and ivE) None of the above
F) A) and C)

Question 2

In order to have a high-quality finished product:

Accepted Answer

A)   appraisal costs must exceed external failure costs
B)   the product's design specifications must meet customers' expectations
C)   the product must meet the standards of its design
D)   the product's design specifications must meet customers' expectations AND the product must meet the standards of its designE) None of the above
F) B) and C)

Question 3

When throughput increases with no change in operating expenses or inventory levels,then:

Accepted Answer

A)   profit and return on investment will increase and cash flow will decrease
B)   profit will increase and return on investment and cash flow will decrease
C)   profit,return on investment and cash flow will increase
D)   profit and cash flow will increase and return on investment will decreaseE) None of the above
F) All of the above

Question 4

Six sigma refers to:

Accepted Answer

A)   business improvement methodology that involves rigours data analysis
B)   The amount of quality deviation that is considered acceptable in total quality management
C)   The formal quality accreditation relating to a series of standards recognised by an international quality setting agency
D)   The six key features of total quality managementE) C) and D)
F) A) and D)

Question 5

Throughput accounting uses which of the following measures of the effects of bottlenecks?
i.Financial measures of inventory
ii.Financial measures of throughput
iii.Non-financial measures of throughput
iv.Operating expenses

Accepted Answer

A)   i,ii and iii
B)   ii,iii and iv
C)   i,iii and iv
D)   i,ii and ivE) C) and D)
F) All of the above

Question 6

Which of the following statements is/are false?
i.Determining the cause of non-value-added activities requires cost driver analysis
ii.Building activities into processes will quickly identify the causes of non-value-added activities.
iii.Identifying root cause cost drivers is sufficient to enable non-value-added activities to be eliminated.

Accepted Answer

A)   i and ii
B)   ii and iii
C)   i and iii
D)   All of the given answersE) A) and B)
F) A) and C)

Question 7

Business process re-engineering is a radical approach to managing costs that involves a complete rethink of the processes undertaken to achieve major improvements in cost and quality.

Accepted Answer

A) True 
 B)False

Question 8

Quality of conformance refers to:

Accepted Answer

A)   the degree to which the product meets its design specifications
B)   the extent to which the actual product is designed for its intended use
C)   an ideal that can never be attained
D)   a cost control that is achievableE) C) and D)
F) A) and C)

Question 9

From the following list of costs for a kitchen manufacturer,determine the amount of value-added cost.

Accepted Answer

A)   $57 000
B)   $54 000
C)   $58 000
D)   $59 000E) A) and B)
F) C) and D)

Question 10

Appraisal costs refer to costs incurred:

Accepted Answer

A)   in preventing defects
B)   in determining whether defects exist
C)   because defective products or services are delivered to customers
D)   in determining customer demandE) None of the above
F) A) and C)

Question 11

Which statement is incorrect?

Accepted Answer

A)   Total quality management (TQM) relates only to the manufacturing processes.
B)   TQM is customer-driven.
C)   TQM focuses on the flow of activity across the organisation.
D)   Continuous improvement is a key element of TQM.E) B) and D)
F) B) and C)

Question 12

Which of the following statements about throughput accounting is false?

Accepted Answer

A)   Throughput accounting is criticised for being short-term focus
B)   Under throughput accounting,operating expenses are not relevant
C)   Throughput accounting measures the financial effects of bottlenecks
D)   Under throughput accounting,inventory is considered undesirableE) C) and D)
F) A) and C)

Question 13

When we consider the life cycle sequence of a product,the majority of costs for a typical product have been committed by the end of:

Accepted Answer

A)   product planning
B)   design and development
C)   customer support
D)   productionE) A) and B)
F) C) and D)

Question 14

Quality costs - failure,prevention and appraisal - can be graphed to determine the acceptable quality level of a firm.

Accepted Answer

A) True 
 B)False

Question 15

A systematic approach in analysing the product and process design,with the aim of eliminating any non-value-added elements,to achieve the target cost is known as:

Accepted Answer

A)   component level target costs
B)   value engineering
C)   strategic cost reduction
D)   cost reduction objectiveE) A) and B)
F) A) and C)

Question 16

Lazy Linda Ltd manufactures small kitchen appliances.One of the non-value added activities identified by the production manager is 'reworking the electrical component in a toaster'.Which of the following is a likely root cause cost driver?

Accepted Answer

A)   The number of products requiring rework.
B)   The quality of the completed toaster.
C)   The quality of the electrical wiring purchased from suppliers.
D)   Idle labour hours.E) C) and D)
F) A) and B)

Question 17

Which of the following statements is/are correct?

Accepted Answer

A)   Quality of design and quality of conformance are both important concepts in the measurement of excellence.
B)   Quality of design is the degree to which a product meets design specifications.
C)   Quality of conformance is the degree to which a product conforms to customer expectations.
D)   All of the given answers.E) C) and D)
F) All of the above

Question 18

Carwell has introduced a new product with a target price of $150 and a target cost of $90.What is the target percentage margin on sales?

Accepted Answer

A)   20%
B)   33.3%
C)   40%
D)   50%E) None of the above
F) A) and B)

Question 19

Lazy Linda Kitchen Appliances manufacturers small kitchen appliances like toasters and blenders.Last month Lazy Linda recorded the following quality costs:
Lazy Linda's total appraisal cost was:

Accepted Answer

A)   $5000
B)   $9500
C)   $12 000
D)   $18 000E) A) and D)
F) None of the above

Question 20

The following are the expected quality costs for a firm for a selected period.Calculate the amount of internal failure costs.

Accepted Answer

A)   $5000
B)   $7500
C)   $8500
D)   $9500E) None of the above
F) All of the above

Exam 16: Managing Costs and Quality

Quality costs - failure,prevention and appraisal - can be graphed to determine the acceptable quality level of a firm.

Correct Answer
verified

Carwell has introduced a new product with a target price of $150 and a target cost of $90.What is the target percentage margin on sales?

Correct Answer
verified

From the following list of costs for a kitchen manufacturer,determine the amount of value-added cost.

Correct Answer
verified

Which of the following is a possible cause of a firm's reluctance to implement activity-based management (ABM) ? I Employee resistance to change Ii) Lack of understanding of the benefits of ABM. Iii) Significant resources required.iv.Focus is on value-added activities.

Correct Answer
verified

Lazy Linda Ltd manufactures small kitchen appliances.One of the non-value added activities identified by the production manager is 'reworking the electrical component in a toaster'.Which of the following is a likely root cause cost driver?

Correct Answer
verified

When we consider the life cycle sequence of a product,the majority of costs for a typical product have been committed by the end of:

Correct Answer
verified

Which statement is incorrect?

Correct Answer
verified

Lazy Linda Kitchen Appliances manufacturers small kitchen appliances like toasters and blenders.Last month Lazy Linda recorded the following quality costs: Lazy Linda's total appraisal cost was:

Correct Answer
verified

A systematic approach in analysing the product and process design,with the aim of eliminating any non-value-added elements,to achieve the target cost is known as:

Correct Answer
verified

Which of the following statements about throughput accounting is false?

Correct Answer
verified

Business process re-engineering is a radical approach to managing costs that involves a complete rethink of the processes undertaken to achieve major improvements in cost and quality.

Correct Answer
verified

Which of the following statements is/are correct?

Correct Answer
verified

Correct Answer
verified

Quality of conformance refers to:

Correct Answer
verified

Throughput accounting uses which of the following measures of the effects of bottlenecks? i.Financial measures of inventory ii.Financial measures of throughput iii.Non-financial measures of throughput iv.Operating expenses

Correct Answer
verified

When throughput increases with no change in operating expenses or inventory levels,then:

Correct Answer
verified

In order to have a high-quality finished product:

Correct Answer
verified

Appraisal costs refer to costs incurred:

Correct Answer
verified

The following are the expected quality costs for a firm for a selected period.Calculate the amount of internal failure costs.

Correct Answer
verified

Six sigma refers to:

Correct Answer
verified

Exam 16: Managing Costs and Quality

Quality costs - failure,prevention and appraisal - can be graphed to determine the acceptable quality level of a firm.

Correct AnswerverifiedShow Answer

Carwell has introduced a new product with a target price of $150 and a target cost of $90.What is the target percentage margin on sales?

Correct AnswerverifiedShow Answer

From the following list of costs for a kitchen manufacturer,determine the amount of value-added cost.

Correct AnswerverifiedShow Answer

Which of the following is a possible cause of a firm's reluctance to implement activity-based management (ABM) ? I Employee resistance to change Ii) Lack of understanding of the benefits of ABM. Iii) Significant resources required.iv.Focus is on value-added activities.

Correct AnswerverifiedShow Answer

Lazy Linda Ltd manufactures small kitchen appliances.One of the non-value added activities identified by the production manager is 'reworking the electrical component in a toaster'.Which of the following is a likely root cause cost driver?

Correct AnswerverifiedShow Answer

When we consider the life cycle sequence of a product,the majority of costs for a typical product have been committed by the end of:

Correct AnswerverifiedShow Answer

Which statement is incorrect?

Correct AnswerverifiedShow Answer

Lazy Linda Kitchen Appliances manufacturers small kitchen appliances like toasters and blenders.Last month Lazy Linda recorded the following quality costs: Lazy Linda's total appraisal cost was:

Correct AnswerverifiedShow Answer

A systematic approach in analysing the product and process design,with the aim of eliminating any non-value-added elements,to achieve the target cost is known as:

Correct AnswerverifiedShow Answer

Which of the following statements about throughput accounting is false?

Correct AnswerverifiedShow Answer

Business process re-engineering is a radical approach to managing costs that involves a complete rethink of the processes undertaken to achieve major improvements in cost and quality.

Correct AnswerverifiedShow Answer

Which of the following statements is/are correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Quality of conformance refers to:

Correct AnswerverifiedShow Answer

Throughput accounting uses which of the following measures of the effects of bottlenecks? i.Financial measures of inventory ii.Financial measures of throughput iii.Non-financial measures of throughput iv.Operating expenses

Correct AnswerverifiedShow Answer

When throughput increases with no change in operating expenses or inventory levels,then:

Correct AnswerverifiedShow Answer

In order to have a high-quality finished product:

Correct AnswerverifiedShow Answer

Appraisal costs refer to costs incurred:

Correct AnswerverifiedShow Answer

The following are the expected quality costs for a firm for a selected period.Calculate the amount of internal failure costs.

Correct AnswerverifiedShow Answer

Six sigma refers to:

Correct AnswerverifiedShow Answer

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verified

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