WorksheetsSCM CHAPTERS 6-10 MCQ REVIEWER
Total questions: 108
Worksheet time: 54mins
Implementation of total quality management (TQM) in a firm:
must follow a rigid, predetermined process to be successful.
involves some lower-level managers and all senior executives.
takes from 3-5 years
is a bottoms up process, with senior management involved only in the final phase.
Goalpost quality conformance differs conformance differs from absolute quality conformance like
"generally= differs from <always."
"range" differs from "point"
"probable" differs from "certain"
"many" differs from "one"
The quality cost of prevention is:
exampled by the cost of servicing warranties.
refers only to zero-defect programs.
an upstream cost.
a downstream cost
Typically, as prevention costs increase, other costs of quality:
are not affected.
change, but the direction cannot be predicted.
increase, but at a slower pace.
decrease.
Examples of the quality cost of prevention include all of the following, except:
tuition for external training.
additional tolerance controls for machinery.
depreciation of a training room.
an annual award for lowest rework rate.
Appraisal costs are incurred to measure and analyze data to test product or service in conformity to specifications, but not to:
reduce error or prevent recurrence of error.
change procedures.
change policy.
check on quality standards.
The key difference(s) between internal failure cost and external failure cost is (are):
when the cost happens.
where the cost happens.
both when and where the cost happens.
whether the cost happens.
Which one of the following is not listed as a practice that successful TQM firms use to ensure having quality suppliers?
forming long-term relationships with suppliers as working partners.
setting measures that truly reflect the needs and expectations of suppliers.
reducing the supplier base.
selecting suppliers based on price and their capability and willingness to improve quality, cost, delivery, flexibility, and for their dedication to continuous improvement.
Conformance to a quality specification expressed as a specified range around a target is
endzone conformance.
target conformance.
goalpost conformance.
absolute quality conformance.
Conformance that requires all products or services to meet exactly the target value with no variation allowed is
endzone conformance.
target conformance.
goalpost conformance.
absolute quality conformance.
Just-in-time purchasing requires
larger and less frequent purchase orders.
smaller and less frequent purchase orders.
smaller and more frequent purchase orders.
larger and more frequent purchase orders.
A demand-pull system in which each component in a production line is produced immediately as needed by the next step in the production line is referred to as
just-in-time purchasing.
materials requirements planning.
relevant total costs.
economic order quantity
All of the following are potential financial benefits of just-in-time except
lower investments in inventories.
lower investments in plant space for inventories.
reducing the risk of obsolescence.
reducing manufacturing lead time.
Cost quality reports usually do not consider
external failure costs.
opportunity costs.
internal failure costs.
appraisal costs.
Changing to an activity-based costing/management system will not
change the way that resources are allocated.
change the way that costs are allocated.
change all the people's jobs.
change the way that performance is evaluated.
Resistance to changing a management accounting and control system (MACS) can occur for the reasons listed below, except
employees are set in their ways and will act defensively.
an employee's compensation and rewards may be altered.
the balance of power may shift unfavorably for the employee.
employees have to wait for a vote of shareholders before a MACS can be changed.
One common mistake that managers make when changing to a new cost management system is
they involve too many in making the change.
they take too long to implement the change.
they over-budget for the cost of the change.
they try to change too many things simultaneously.
The just-in-time manufacturing (JIT) system is also called the
job in training system.
job in transit system.
zero cost system
zero inventories system.
The traditional focus in management accounting has been to develop
only quantitative performance measures.
only qualitative performance measures.
both quantitative and qualitative performance measures.
neither quantitative nor qualitative measures
A well-designed MACS develops and uses
both quantitative and qualitative information for control, motivation and performance evaluation.
only quantitative information for control, motivation and performance evaluation.
only qualitative information for control, motivation and performance evaluation.
neither quantitative nor qualitative information for control, motivation, and performance evaluation.
Product quality and profitability are:
closely related
inversely related
loosely related
indirectly linked
A product that meets or exceeds customer expectation is:
the norm in today's marketplace.
a quality product.
a result of planning for quality.
All of the above answers are correct.
Core principles of total quality management include:
focusing on customer satisfaction.
striving on continuous improvement.
involvement of the entire work force.
Answer a, b and c are all core principles.
Continuous improvement (Kaizen) in today's global economy:
is desirable if a firm promotes quality.
is necessary if a firm is to remain competitive.
Speaks only to the control of defects.
Is practically impossible.
Implementation of total quality management (TQM) in a firm:
must follow a rigid, predetermined process to be successful.
takes from 5-0 years
involves all lower-level managers and as well as senior executives
is a bottoms up process, with senior management involved only in the final phase.
The Taguchi Quality Loss Function demonstrates that as the quality measure of a product declines, the loss due to quality defects:
increases as a quadratic function.
increases in direct proportion.
increases in an inverse proportion.
decrease as a quadratic function.
If quality expert Philip Crosby would argue that there is no such thing as a quality problem, but only a problem of:
design.
materials.
labor.
All of the above.
If one were to classify quality costs as prevention, appraisal, internal failure and external failure, the lowest and highest costs would tend to be respectively:
appraisal and external failure.
appraisal and internal failure.
prevention and internal failure.
prevention and external failure.
Regardless of the differences in form and control, a common feature that should be present in any Cost of Quality is that the report:
promotes total quality management (TQM).
stratifies costs by product line.
stratifies costs by department.
stratifies costs by plant.
Whichever of the many helpful tools a firm chooses for identifying significant quality problems, the tool(s) will be most effective if:
management accountants are not involved in their selection.
management accountants take a pro-active role throughout the process.
the firm hires technical experts to choose the tool(s).
the firm leaves selection of the tool(s) to the supervisors.
Which one of the following is not a category of costs of quality?
Promotion.
external failure.
internal failure.
Appraisal.
Costs incurred to keep quality defects from occurring are
external failure costs.
appraisal costs.
internal failure costs.
prevention costs.
Costs incurred in measurement and analysis of data to ascertain conformity of products and services to the specifications are
external failure costs.
appraisal costs.
internal failure costs.
prevention costs.
Costs incurred as a result of poor quality found through appraisal prior to delivery to customers are
external failure costs.
appraisal costs.
internal failure costs.
prevention costs.
Warranty costs would be classified as
prevention costs.
retention costs.
appraisal costs.
external failure costs.
Rework costs would be classified as
prevention costs.
retention costs.
appraisal costs.
internal failure costs.
Test acquisition costs would be classified as
prevention costs.
retention costs.
appraisal costs.
Internal failure costs.
Reinspection costs would be classified as
prevention costs.
retention costs.
appraisal costs.
Internal failure costs.
Costs of meetings would be classified as
prevention costs.
retention costs.
appraisal costs.
internal failure costs.
Finished goods inspection costs would be classified as
prevention costs.
retention costs.
appraisal costs.
internal failure costs.
Cost conformance includes
prevention costs and appraisal costs.
internal failure costs and external failure costs.
prevention costs and internal failure costs.
appraisal costs and external failure costs.
Which of the following represents value-added time in the manufacturing cycle?
Inspection time
Queue time
Move time
Process time
Throughput time consists of:
Process time
Inspection time and move time.
Process time, inspection time, and move time
Process time, inspection time, move time, and queue time
Manufacturing Cycle Efficiency (MCE) is computed as:
Throughput Time ÷ Delivery Cycle Time
Process Time ÷ Delivery Cycle Time
Value-Added Time ÷ Throughput Time
Value-Added Time ÷ Delivery Cycle Time
Lorenzo Corporation has provided the following data for one of its products:
Process time = 3 days
Queue time = 4 days
Inspection time = 0.7 days
Move time = 0.3 days
Wait time = 9 days
The manufacturing cycle efficiency for this operation would be closest to:
0.375
0.45
0.18
0.33
Use the following information to answer questions 5 through 8. Rainee Manufacturing Corporation has the following information:
Moving time = 8 days
Inspection time = 2 days
Processing time = 10 days
Storage time = 30 days
What is the total amount of value-added time?
10 days
30 days
40 days
50 days
Use the following information to answer questions 5 through 8. Rainee Manufacturing Corporation has the following information:
Moving time = 8 days
Inspection time = 2 days
Processing time = 10 days
Storage time = 30 days
What is the total amount of nonvalue-added time?
10 days
30 days
40 days
50 days
Use the following information to answer questions 5 through 8. Rainee Manufacturing Corporation has the following information:
Moving time = 8 days
Inspection time = 2 days
Processing time = 10 days
Storage time = 30 days
What is the product’s cycle time?
10 days
30 days
40 days
50 days
Use the following information to answer questions 5 through 8. Rainee Manufacturing Corporation has the following information:
Moving time = 8 days
Inspection time = 2 days
Processing time = 10 days
Storage time = 30 days
What is the manufacturing cycle efficiency?
25.0%
80.0%
20.0%
60.0%
Use the following information to answer questions 9 and 10. Nicole Corporation has the following information:
Moving time = 10 days
Inspection time = 5 days
Processing time = 15 days
Storage time = 20 days
What is the product’s cycle time?
10 days
15 days
35 days
50 days
Use the following information to answer questions 9 and 10. Nicole Corporation has the following information:
Moving time = 10 days
Inspection time = 5 days
Processing time = 15 days
Storage time = 20 days
What is the manufacturing cycle efficiency?
30.0%
20.0%
50.0%
70.0%
The critical success factors for a business today are all:
planning-oriented.
production-oriented.
sales-oriented.
customer-oriented.
The Theory of Constraints (TOC) focuses on improving cycle time, the rate at which raw materials are converted to finished product. This strategic management technique is primarily concerned with the critical success factor of:
energy.
quality.
originality.
speed.
The key concept in TOC is:
benchmarking.
throughout.
the bottleneck.
reengineering.
Which of the following determines the desired cost for a product based upon a given competitive price?
benchmarking.
target costing.
reengineering.
life-cycle costing.
Target costing forces the firm to become more competitive, like:
reengineering.
life-cycle costing.
activity-based costing.
benchmarking.
Which of the following is not one of the steps in the life cycle of a product?
manufacturing, inspecting, packaging and warehousing
research and development
purchasing and receiving
marketing, promotion and distribution
In comparison to the Cost Life Cycle of a product, the Sales Life Cycle of a product is:
much shorter
much longer
exactly parallel, except that it is expressed in sales terms.
different because it represents a sequence of phases relating to sales, not production.
In each of the phases of a product's sales life cycle, management's focus will be:
parallel
on the next phase as well as the current one.
different
undifferentiated
generally, firms will price a product more competitively at which stage of the products sales life cycle?
Product Introduction
Growth
Maturity
Decline
Because of the four stages of a product's sales life cycle has a different emphasis, the cost management system will be expected to provide data that is:
different at each stage.
common to all stages.
lesser in amount in the later stages.
lesser in amount in the early stages.
The sequence of activities within the firm which begins with research and development, followed by design, and manufacturing, marketing / distribution, and customer service is the:
sales life cycle
target life cycle
market life cycle
critical life cycle
The sequence of phases in the product or service's life in the market - from the introduction of the product or service to the growth in sales and finally maturity, decline, and withdrawal from the market is the:
sales life cycle
target life cycle
market life cycle
cost life cycle
When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising
target costing
life cycle costing
variable costing
absorption costing
Which one of the following is used in target costing to reduce product cost by analyzing the tradeoffs between (1) different types and levels of product functionality and (2) total product cost?
benchmarking
functional analysis
productivity analysis
value engineering
Which one of the following is a common type of value engineering in which each major function or feature of the product is examined in terms of its performance and cost?
benchmarking
functional analysis
productivity analysis
functional engineering
Which one of the following is a common form of value engineering in which the designing team prepares several possible designs of the product?
benchmarking
functional analysis
productivity analysis
design analysis
Which one of the following is not one of the five steps in TOC analysis?
Identify the binding constraint(s).
Determine the most efficient utilization for each binding constraint.
Manage the flow through the binding constraint.
Deduct capacity from the constraint.
Which one of the following is true concerning TOC?
NO — NO — YES
NO — YES — NO
YES — NO — NO
NO — YES — YES
Which one of the following is a downstream cost?
research and development
packaging
purchasing
prototyping
which one of the following industries has high upstream costs?
retail
perfumes
cosmetics
computer software
Which of the following is not a critical success factor at the design stage?
improved ease-of-manufacture
reduced time-to-market
reduced expected service costs
enhanced quality
Which one of the following is not a common design method?
concurrent engineering
design engineering
templating
prototyping
Sales begin to grow rapidly and product variety increases in:
phase three
phase two
phase five
phase four
Sales continue to increase but at a decreasing rate is:
phase three
phase two
phase five
phase four
Sales begin to decline, as does the number of competitors, in:
phase three
phase two
phase five
phase four
A good example of a common cost which normally could not be assigned to products on a segmented income statement except on an arbitrary basis would be:
product advertising outlays.
salary of a corporation president.
direct materials.
the product manager's salary.
All other things being equal, if a division's traceable fixed expenses increase:
the division's contribution margin ratio will decrease.
the division's segment margin ratio will remain the same.
the division's segment margin will decrease.
the overall company profit will remain the same.
Devlin Company has two divisions, C and D. The overall company contribution margin ratio is 30%, with sales in the two divisions totaling P500,000. If variable expenses are P300,000 in Division C, and if division C's contribution margin ratio is 25%, then sales in Division D must be:
P50,000
P100,000
P150,000
P200,000
Walsh Company has three stores: X, Y, and Z. During August, the variable expenses in Store X were P90,000 and the contribution margin ratio was 25%. Store Y had a contribution margin of P27,000 and a contribution margin ratio of 20%. Store Z had variable expenses of P120,000 and a variable expense ratio of 60% of sales. For August, Walsh Company's sales were:
P318,000
P455,000
P485,000
P555,000
Channing Company has two divisions, S and T. The company's overall contribution margin ratio is 30% when sales in the two divisions total P750,000. If variable expenses are P405,000 in Division S, and if Division S's contribution margin ratio is 25%, then sales in Division T must be:
P75,000
P150,000
P225,000
P300,000
JTC Company has two sales areas: East and West. During last year, the contribution margin in the East area was P50,000, or 20% of sales. The segment margin in the West area was P15,000, or 8% of sales. Traceable fixed costs are P15,000 in the East and P10,000 in the West. During last year, the company reported total net income of P26,000.
— The total fixed costs (traceable and common) for JTC Company for the year were:
P49,000
P25,000
P24,000
P50,000
JTC Company has two sales areas: East and West. During last year, the contribution margin in the East area was P50,000, or 20% of sales. The segment margin in the West area was P15,000, or 8% of sales. Traceable fixed costs are P15,000 in the East and P10,000 in the West. During last year, the company reported total net income of P26,000.
— The variable costs for the West Area for the year were:
P230,000
P185,000
P162,500
P65,000
Okinawa Company has two stores: D and S. During November, Okinawa Company reported a net income of P30,000 and sales of P450,000. The contribution margin in Store D was P100,000, or 40% of sales. The segment margin in Store S was P30,000, or 15% of sales. Traceable fixed expenses are P60,000 in Store D, and P40,000 in Store S.
— Sales in Store D totaled:
P400,000
P250,000
P150,000
P100,000
Okinawa Company has two stores: D and S. During November, Okinawa Company reported a net income of P30,000 and sales of P450,000. The contribution margin in Store D was P100,000, or 40% of sales. The segment margin in Store S was P30,000, or 15% of sales. Traceable fixed expenses are P60,000 in Store D, and P40,000 in Store S.
— Variable expenses in Store S totaled:
P70,000
P110,000
P200,000
P130,000
Okinawa Company has two stores: D and S. During November, Okinawa Company reported a net income of P30,000 and sales of P450,000. The contribution margin in Store D was P100,000, or 40% of sales. The segment margin in Store S was P30,000, or 15% of sales. Traceable fixed expenses are P60,000 in Store D, and P40,000 in Store S.
— Okinawa Company's total fixed expenses for the year were:
P40,000
P100,000
P140,000
P170,000
Okinawa Company has two stores: D and S. During November, Okinawa Company reported a net income of P30,000 and sales of P450,000. The contribution margin in Store D was P100,000, or 40% of sales. The segment margin in Store S was P30,000, or 15% of sales. Traceable fixed expenses are P60,000 in Store D, and P40,000 in Store S.
— The segment margin ratio in Store D was:
16%
24%
40%
60%
Mamee Company has two divisions, 1 and 2. During July, the contribution margin in Division 1 was P60,000. The contribution margin ratio in Division 2 was 40% and its sales were P250,000. Division 2's segment margin was P60,000. The common fixed expenses were P50,000 and the company net income was P20,000. The segment margin for Division 1 was:
P0
P10,000
P50,000
P60,000
Under variable costing, fixed manufacturing overhead is:
carried in a liability account.
carried in an asset account.
ignored.
immediately charged against sales as a period cost.
Which one of the following statements is true for a firm that uses variable costing?
The unit product cost changes because of changes in the number of units manufactured.
Profit fluctuates with sales.
Any underapplied overhead is calculated into the product cost.
Product costs include variable administration costs.
A principal difference between variable costing and absorption costing centers on:
whether variable manufacturing costs should be included as product costs.
whether fixed manufacturing costs should be included as product costs.
whether fixed manufacturing costs and fixed selling and administrative costs should be included as product costs.
none of these.
Under variable costing:
net income will tend to move upward and downward in response to changes in levels of production.
inventory costs will always be lower than under absorption costing.
net income will tend to vary inversely with production changes.
net income will always be higher than under absorption costing.
When sales are constant, but the production level fluctuates, net income determined by the variable costing method will:
fluctuate in direct proportion to changes in production.
remain constant.
fluctuate inversely with changes in production.
be greater than net income under absorption costing.
The costing method that treats all fixed costs as period costs is:
absorption costing.
job-order costing.
variable costing.
process costing.
Under absorption costing, fixed factory overhead costs:
are deferred in inventory when production exceeds sales.
are always treated as period costs.
are released from inventory when production exceeds sales.
none of these.
WB Company computes net income under both the absorption costs approach and the variable costing approach. For a given year, the absorption costing net income was greater than the variable costing net income. This fact suggests that:
variable manufacturing cots were less than fixed manufacturing costs.
more units were produced during the year than were sold.
more units were sold during the year than were produced.
common costs were greater than variable costs for the year.
Net income computed using variable costing would exceed net income computed using absorption costing if:
units sold exceed units produced.
units sold are less than units produced.
units sold equal units produced.
the unit fixed cost is zero.
When sales are constant, but the production level fluctuates, net income determined by the absorption costing method will:
tend to fluctuate in the same direction as fluctuations in the level of production.
tend to remain constant.
tend to fluctuate inversely with fluctuations in the level of production.
none of these.
Manga, Inc. manufactured 700 units last year. The ending inventory consisted of 100 units. There was no beginning inventory. Variable manufacturing costs were P6.00 per unit and fixed manufacturing costs were P2.00 per unit. What would be the change in the peso amount of ending inventory if variable costing was used instead of absorption costing?
P800 decrease.
P200 decrease.
P0
P200 increase.
Variable production costs are P12 per unit and variable selling and administrative expenses are P3 per unit. Fixed manufacturing overhead totals P36,000 and fixed selling and administration expenses total P40,000. Assuming a beginning inventory of zero, production of 4,000 units and sales of 3,600 units, the peso value of the ending inventory under variable costing would be:
P4,800
P8,400
P6,000
P3,600
The following data pertain to last year's operations at HP Corp.:
Units in beginning inventory = 0
Units produced = 20,000
Units sold = 19,000
Selling price per unit = P100.00
Variable costs per unit:
– Direct materials = P12.00
– Direct labor = 25.00
– Variable manuf. overhead = 3.00
– Variable selling and administrative = 2.00
Fixed costs per year:
– Fixed manuf. overhead = P500,000
– Fixed selling and administrative = 600,000
— What was the variable costing net income last year?
P12,000
P57,000
P2,000
P27,000
Last year, Mayumi Company had income of P40,000 using variable costing. Beginning and ending inventories were 22,000 and 27,000 units, respectively. If the fixed manufacturing overhead cost was P3.00 per unit, what was the income using absorption costing?
P15,000
P25,000
P40,000
P55,000
The following data pertain to lThe following data pertain to last year's operations at Lois, Incorporated:
Units in beginning inventory = 0
Units produced = 100,000
Units sold = 98,000
Selling price per unit = P10.00
Variable costs per unit:
– Direct materials = P1.50
– Direct labor = 2.50
– Variable manuf. overhead = 1.00
– Variable selling and administrative = 2.00
Fixed costs per year:
– Fixed manuf. overhead = P200,000
– Fixed selling and administrative = 50,000
— What was the absorption costing net income last year?
P44,000
P48,000
P50,000
P49,000
Magic Company manufactures a single product. The following data pertain to the company's operations last year:
Selling price per unit = P24
Variable costs per unit:
Production = P8
Selling and administrative = P2
Fixed costs per year:
Production = P48,000
Selling and administrative = 36,000
At the beginning of the year there was no units in inventory. A total of 12,000 units were produced during the year, and 10,000 units were sold.
— Under variable costing, the unit product cost is:
P8.00
P10.00
P12.00
P14.00
Magic Company manufactures a single product. The following data pertain to the company's operations last year:
Selling price per unit = P24
Variable costs per unit:
Production = P8
Selling and administrative = P2
Fixed costs per year:
Production = P48,000
Selling and administrative = 36,000
At the beginning of the year there was no units in inventory. A total of 12,000 units were produced during the year, and 10,000 units were sold.
— Under absorption costing, the unit product cost is:
P8.00
P10.00
P12.00
P15.00
Magic Company manufactures a single product. The following data pertain to the company's operations last year:
Selling price per unit = P24
Variable costs per unit:
Production = P8
Selling and administrative = P2
Fixed costs per year:
Production = P48,000
Selling and administrative = 36,000
At the beginning of the year there was no units in inventory. A total of 12,000 units were produced during the year, and 10,000 units were sold.
— The net income under variable costing would be:
P64,000
P60,000
P56,000
P52,000
Magic Company manufactures a single product. The following data pertain to the company's operations last year:
Selling price per unit = P24
Variable costs per unit:
Production = P8
Selling and administrative = P2
Fixed costs per year:
Production = P48,000
Selling and administrative = 36,000
At the beginning of the year there was no units in inventory. A total of 12,000 units were produced during the year, and 10,000 units were sold.
— The net income under absorption costing would be:
the same as the income under variable costing.
P8,000 greater than the income under variable costing.
P12,000 greater than the income under variable costing.
P8,000 less than the income under variable costing.
A company had a net income of P85,500 using variable costing and a net income of P90,000 using absorption costing. Total fixed manufacturing overhead was P150,000, and production was 100,000 units. Between the beginning and the end of the year, the inventory level:
increase by 4,000 units.
decreased by 4,500 units.
increased by 3,000 units.
decreased by 3,000 units.
