Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
1. Many firms choose to achieve target cost through redesign of the product or service
because they recognize that design decisions:
2. Many firms are finding it is difficult to compete successfully on cost leadership or
differentiation alone, and they must, in fact, compete on both:
3. _________________________ is an important first step in value engineering because it
identifies critical consumer preferences that will define the product's desired functionality.
4. Which of the following are computer-based databases that include comprehensive
information about the firm's cost drivers?
5. Which of the following is a method of reducing cost by identifying parts in different
products that are common and interchangeable?
6. Throughput margin is defined as sales less:
7. The theory of constraints (TOC) emphasizes which of the following?
8. The theory of constraints (TOC) approach is strategically important in dynamic markets
because it leads to:
9. Activity-based costing (ABC) and the theory of constraints (TOC) are viewed as methods
that are:
10. Reduced time-to-market, reduced expected service cost, and ease-of-manufacture are
critical success factors at which stage of the cost life cycle?
11. Concurrent engineering relies on an integrated approach, in which the
engineering/design process takes place throughout the cost life cycle using cross-functional
teams. Strategically, this concurrent approach should give a firm all of the following except:
12. Generally, firms will price a product more competitively at which stages of the product's
sales life cycle?
13. 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:
14. 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:
15. 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:
16. Which one of the following is not one of the five steps in theory of constraints (TOC)
analysis?
17. The goals of coordinating manufacturing processes, reducing the amount of inventory,
and improving overall productivity is particularly important in a:
18. Which one of the following is true concerning the theory of constraints (TOC)?
Has Short-Term Focus Uses Cost Drivers
A) No Yes
B) No No
C) Yes No
D) No Yes
E) Yes Yes
19. Henry Ford was an early pioneer in the use of:
20. During which stage of the sales life cycle of a product do sales continue to increase but
at a decreasing rate, and competition tends to focus on cost?
21. TwoShaft Inc. manufactures a wide variety of parts for recreational boating, including
boat engines. The component is purchased by OEM (Original Equipment Manufacturers) such as
Mercury and Honda, for use in the larger and more powerful outboards. The units sell for $660,
and sales volume averages 32,000 units per year. Recently, TwoShaft's major competitor lowered
the price of the equivalent part to $590. The market was very competitive, and TwoShaft realized
it had to meet the new price or lose significant market share. The controller assembled the
following data for the most recent year:
Cost and Usage for Production of 32,000 Units
Standard
Cost Actual
Quantity Actual
Cost
Materials $6,656,000 $7,136,000
Direct labor 2,272,000 2,176,000
Indirect labor 3,264,000 3,072,000
Inspection (hours) 2,600 546,000
Materials handling
(number of purchases)
73,000
401,500
Machine setups 4,600 1,504,200
Returns and rework
(number of times)
700
95,900
Total $14,931,600
The target cost for maintaining current market share and profitability is (round to nearest cent):
22. Lens Care Inc. (LCI) manufactures specialized equipment for polishing optical lenses.
There are two models - one mainly used for fine eyewear (F-32) and another for lenses used in
binoculars, cameras, and similar equipment (B-13).
The manufacturing cost of each unit is calculated using activity-based costing, using the
following manufacturing cost pools:
Cost Pools Allocation Base Costing Rate
Materials handling Number of parts $2.40 per part
Manufacturing supervision Hours of machine time $14.80 per hour
Assembly Number of parts $3.30 per part
Machine setup Each setup $56.50 per setup
Inspection and testing Logged hours $45.50 per hour
Packaging Logged hours $19.50 per hour
LCI currently sells the B-13 model for $1,775 and the F-32 model for $1,220. Manufacturing
costs and activity usage for the two products are as follows:
B-13 F-32
Direct materials $164.50 $75.60
Number of parts 160.00 120.00
Machine hours 7.90 4.20
Inspection time 1.70 0.80
Packaging time 0.90 0.50
Setups 3.00 2.00
The product cost for model B-13 is:
23. Lens Care Inc. (LCI) manufactures specialized equipment for polishing optical lenses.
There are two models - one mainly used for fine eyewear (F-32) and another for lenses used in
binoculars, cameras, and similar equipment (B-13).
The manufacturing cost of each unit is calculated using activity-based costing, using the
following manufacturing cost pools:
Cost Pools Allocation Base Costing Rate
Materials handling Number of parts $2.40 per part
Manufacturing supervision Hours of machine time $14.80 per hour
Assembly Number of parts $3.30 per part
Machine setup Each setup $56.50 per setup
Inspection and testing Logged hours $45.50 per hour
Packaging Logged hours $19.50 per hour
LCI currently sells the B-13 model for $1,775 and the F-32 model for $1,220. Manufacturing
costs and activity usage for the two products are as follows:
B-13 F-32
Direct materials $164.50 $75.60
Number of parts 160.00 120.00
Machine hours 7.90 4.20
Inspection time 1.70 0.80
Packaging time 0.90 0.50
Setups 3.00 2.00
The product cost for model F-32 is:
24. Lens Care Inc. (LCI) manufactures specialized equipment for polishing optical lenses.
There are two models - one mainly used for fine eyewear (F-32) and another for lenses used in
binoculars, cameras, and similar equipment (B-13).
The manufacturing cost of each unit is calculated using activity-based costing, using the
following manufacturing cost pools:
Cost Pools Allocation Base Costing Rate
Materials handling Number of parts $2.40 per part
Manufacturing supervision Hours of machine time $14.80 per hour
Assembly Number of parts $3.30 per part
Machine setup Each setup $56.50 per setup
Inspection and testing Logged hours $45.50 per hour
Packaging Logged hours $19.50 per hour
LCI currently sells the B-13 model for $1,775 and the F-32 model for $1,220. Manufacturing
costs and activity usage for the two products are as follows:
B-13 F-32
Direct materials $164.50 $75.60
Number of parts 160.00 120.00
Machine hours 7.90 4.20
Inspection time 1.70 0.80
Packaging time 0.90 0.50
Setups 3.00 2.00
The profit margin based on manufacturing cost for model B-13 is:
25. Lens Care Inc. (LCI) manufactures specialized equipment for polishing optical lenses.
There are two models - one mainly used for fine eyewear (F-32) and another for lenses used in
binoculars, cameras, and similar equipment (B-13).
The manufacturing cost of each unit is calculated using activity-based costing, using the
following manufacturing cost pools:
Cost Pools Allocation Base Costing Rate
Materials handling Number of parts $2.40 per part
Manufacturing supervision Hours of machine time $14.80 per hour
Assembly Number of parts $3.30 per part
Machine setup Each setup $56.50 per setup
Inspection and testing Logged hours $45.50 per hour
Packaging Logged hours $19.50 per hour
LCI currently sells the B-13 model for $1,775 and the F-32 model for $1,220. Manufacturing
costs and activity usage for the two products are as follows:
B-13 F-32
Direct materials $164.50 $75.60
Number of parts 160.00 120.00
Machine hours 7.90 4.20
Inspection time 1.70 0.80
Packaging time 0.90 0.50
Setups 3.00 2.00
The profit margin based on manufacturing cost for model F-32 is:
