Cost Accounting Systems (D.

Product Quality and Productivity/ Total Quality Management)

D. Product Quality and Productivity/ Total Quality Management THEORY Productivity Measures 1. A primary objective in measuring productivity is to improve operations either by using fewer inputs to produce the same output, or to produce: A. more effectively C. more outputs with the same inputs B. with fewer constraints D. more outputs with more inputs . !hich of the following assesses the productivity efficiency for all inputs combined in order to value change in productivity" A. partial productivity measurement C. profit#lin$ed productivity measurement B. profile productivity measurement D. total productivity measurement %. Changes in the productivity of different types of resources are &'( always: A. measurable and observable B. in the same direction or at an e)ual pace C. uni)ue and differentiated D. simultaneous and positive *. +ow can productivity be improved" A. using less input to produce the same output B. using the same input to produce more output C. improve input trade#off efficiency by using a less costly mi, of inputs D. all of the above -. 'ne major problem in measuring productivity in not#for#profit organi.ations is the absence of revenue as the: A. common measure for inputs B. common measure for outputs C. basis for financial reporting D. common denominator with commercial firms /. 0roductivity increases if: A. less output is produced with more input. B. the same output is produced with more input.
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C. the same output is produced with fewer inputs. D. laborers put in more effort. 1. A partial productivity measure has several limitations, including that: A. it ignores any productivity effect caused by other manufacturing factor )uantity changes. B. it ignores any effect that changes in the production factor have on productivity. C. it ignores and effect that changes in operating characteristics of the firm may have on the productivity of the input resource. D. all of the above answers are correct. 2. An advantage of partial measures of productivity is that it: A. allows managers to focus on the use of a particular input. B. is a comple, measure that is difficult to interpret by everyone in the organi.ation. C. loo$s at the effect of multiple inputs. D. is a perfect measure of performance. Total quality management 3. Characteristics of total )uality management include: A. focusing on customer satisfaction B. striving on continuous improvement C. involvement of the entire wor$ force D. All of the above are characteristics of (45 16. !hich of the following is not an important principle of (45" A. (he organi.ation should focus on improving goods from the consumer7s viewpoint B. 8veryone in the organi.ation is re)uired to participate C. (here should be a system of planning, controlling, and decision ma$ing D. Complacency is the norm 11. (otal )uality management directs management attention to the relationship between the internal production9service process and the: A. C8' of the competition C. activity analysis B. ultimate customer D. control charts 1 . Continuous improvement is synonymous with: A. process benchmar$ing C. management by objectives B. total )uality management D. management by e,ception

Cost Accounting Systems (D. Product Quality and Productivity/ Total Quality Management)

1%. !hich of the following describes the .ero defects view" A. it permits a predetermined level of defective units to be produced B. it is the level where the number of defects allowed minimi.es total cost. C. it is the level where there are no defects. D. all of the above. :tatistical process control 1*. A techni)ue by which companies analy.e fluctuations in a process is called: A. statistical process control C. benchmar$ing B. a )uality audit D. 0areto analysis 0rocess benchmar$ing 1-. ;ocusing on how best in class companies achieve their results is referred to as: A. reverse engineering C. process benchmar$ing B. results benchmar$ing D. competitive benchmar$ing (otal )uality control 1/. (he goal of total )uality control is A. to have less defective material than good material B . to permit defects as long as they do not e,ceed a certain level C. to have .ero defect D. both b and c Cost of 4uality <eport 11. <egardless of the differences in form and control, a common feature that should be present in any Cost of 4uality <eport is that the report: A. promotes total )uality management =(45> B. stratifies costs by product line C. stratifies costs by plant D. stratifies costs by division Value Engineering 12. ?alue engineering can result in A. product redesign B. changes in materials specifications

?alue chain 13. !hich of the following is the correct se)uence of the value chain" A. design, research and development, production, supply, mar$eting, customer service, distribution B. research and development, design, supply, production, mar$eting, distribution, customer service C. research and development, design, supply, production, mar$eting, customer service, distribution D. supply, research and development, design, production, mar$eting, distribution, customer service 0rocess value analysis 6. A tool that focuses on manufacturing processes and see$s to reduce or optimi.e the activities performed within the process is A. process value analysis C. caveat analysis B. re#engineering D. benchmar$ing 1. A tool that compares how tas$s are performed internally with the best practices of industry leaders is A. process value analysis C. caveat analysis B. re#engineering D. benchmar$ing . Attempting to determine why activities are performed and how well they are performed is a goal of A. process value analysis B. both traditional and activity#based costing systems C. computer#integrated manufacturing systems D. just#in#time manufacturing 0rocess <e#engineering %. An approach to developing new ways to perform e,isting activities is called A. process value analysis C. caveat analysis B. re#engineering D. benchmar$ing *. A danger in 0rocess <eengineering is that: A. non#value#3added activities may be eliminated. B. some resources may no longer be re)uired.
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C. modifications in process methods D. all of the above

Cost Accounting Systems (D. Product Quality and Productivity/ Total Quality Management)

C. employee morale may suffer. D. all of the above. Quality osts 0revention cost -. Costs incurred to improve product )uality by precluding product defects are $nown as: A. internal failure costs C. appraisal costs B. e,ternal failure costs D. prevention cost /. !or$er training is a=n> A. appraisal cost. B. e,ternal failure cost. 1. An e,ample of a control cost is: A. supplier evaluation and selection B. scrap C. internal failure cost. D. prevention cost. C. cost of recalling products D. all of the above

D. inspecting products during production % . :ales returns and allowances due to a )uality deficiency is an e,ample of: A. e,ternal failure costs C. internal failure costs B. appraisal costs D. prevention cost Analysis %%. @f a company has high failure costs, the best course of action to reduce total )uality costs would be to increase A. prevention costs C. the cost of non#compliance B. the costs associated with compliance D. appraisal costs Value!added " non!value added costs &on#value added costs %*. (he costs caused by inefficiency in prevention activities are: A. nonvalued#added costs B. value#added costs C. neither nonvalued#added or value#added costs D. both nonvalued#added or value#added costs PRO#$EM% Productivity Ratios 1 . Aetters Company manufactured 166,666 motors for dehumidifiers and used 6,666 direct labor hours. (he selling price of each motor is 0 - and the labor cost is 016 per hour. (he labor productivity ratio is: A. 016 C. * motors per hour B. 01 .-6 D. .- motors per hour Productivity!lin&ed increase in gross 'ro(it . At the end of 66/, Duabi Corporation implemented a new labor process and redesigned its product with the e,pectation that input usage efficiency would increase. &ow, at the end of 661, the president of the company wants an assessment of the changes on the company7s productivity. (he data needed for the assessment are as follows: 66/ 661 'utput %6,666 %2,666 'utput prices 01 01 5aterials =lbs.> 16,666 16,*66
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Appraisal cost 2. (he )uality costs that are incurred to determine whether particular units of product meet )uality standards are A. appraisal costs. C. internal failure costs. B. e,ternal failure costs. D. prevention costs. @nternal failure cost 3. (he cost of downtime on machines while rewor$ is being performed is a=n> A. appraisal cost. C. internal failure cost. B. e,ternal failure cost. D. prevention cost. %6. (he costs of rewor$ing defective units to ma$e them saleable are classified as A. appraisal costs C. internal failure costs B. e,ternal failure costs D. prevention costs 8,ternal failure cost %1. !hich of the following represents an e,ternal failure cost" A. reprocessing a defective product before shipment B. replacing a defective product after shipment C. hiring for )uality

Cost Accounting Systems (D. Product Quality and Productivity/ Total Quality Management)

5aterials unit price 02 01 Babor hours 1*,666 1-,666 Babor rate per hour 0/ 01 0ower =Cw+> 1 ,666 1%,666 0rice per Cw+ 0% 0* By how much did profits change as a result of productivity changes in materials" A. 0 1%,666 decrease C. 0 %,*66 decrease B. 0 1-,216 increase D. 0 6,266 increase Price!recovery com'onent % . At the end of 66/, Alban Company implemented a new labor process and redesigned its product with the e,pectation that input usage efficiency would increase. &ow, at the end of 661, the president of the company wants an assessment of the changes on the company7s productivity. (he data needed for the assessment are as follows: 66/ 661 'utput 16,666 1 ,666 'utput prices 016 016 Change in profits 016,166 0rofit#lin$ed measurements: 5aterials 0*,/66 Babor %, -6 0ower = -6> &et 01,/66 +ow much is the price#recovery component" A. 0 %,166 C. 016,166 B. 0= 1,%-6> D. 0 1,/66 )se t*e (ollo+ing in(ormation to ans+er questions ,- t*roug* ./0 (esting <ewor$ (raining 0roduct liability insurance 4uality planning Customer surveys <einspection and retesting !arranty repairs (otal )uality costs 0 /6,666 1,-66 *-,666 %-,666 *%,666 1-,666 11,-66 -6,666 0 3%,666
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:ales for 66- were 01,666,666

*

!hat is the amount of appraisal costs" A. 0/6,666 B. 03 ,-66 !hat is the amount of e,ternal failure costs" A. 0%-,666 B. 02-,666

C. 0% ,-66 D. 01-,666 C. 0-6,666 D. 0/1,-66

@f Curt Company is able to reduce )uality costs to .- percent of sales, what will happen to profits" A. Decrease by 0 -,666 C. Decrease by 0 3%,666 B. @ncrease by 0 /2,666 D. @ncrease by 0 -,666

12%3ER E4P$121T5O2%

. Answer: B Babor productivity ratios are operational measure =166,6669 6,666 D - motors per hour> or financial measure E= - F 166,666>9= 6,666 F 16> D 01 .-6>. . Answer: B 5aterial productivity ratio, 66/: =%6,666 G 16,666> % Actual materials =lbs>, 661 16,*66 <e)uired lbs. based on 66/: =%2,666 G %> 1 ,//1 :avings in number of pounds , /1 5aterial productivity#lin$ed to profit: = , /1 , 01> 01-,216 Answer: A 0rice recovery component: Change in 0rofits: Deduct profit#lin$ed productivity change 0rice recovery component Answer: D (esting Customer surveys (otal appraisal costs Answer: B 0roduct liability insurance !arranty repairs (otal e,ternal costs

016,166 1,/66 0 %,166

0/6,666 1-,666 01-,666 0%-,666 -6,666 02-,666 0 3%,666 -,666 0 /2,666

Answer: B Current )uality costs Bess proposed )uality costs: =6.6 - , 015> Cost savings =increase in profits>