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59. Which of the following is true of integrated reporting?
a. Integrated reporting occurs when an organization combines its annual report with its sustainability report to form
one combined report for all stakeholders.
b. Integrated reporting is not required to follow any particular set of rules when preparing the information contained
within the report.
c. In most countries and business environments, integrated reporting is not required to have the report contents
verified by an independent third party.
d. Integrated reporting regulations have been under development since the early 1910s.
60. Which of the following is true of greenwashing?
a. Greenwashing occurs when an organization follows reporting standards and combines its annual report with its
sustainability report to form one combined report for all stakeholders, including investors.
b. It is a situation in which stakeholders believe that an organization’s corporate sustainability report contains
environmental information that is materially biased in favor of the reporting organization.
c. Greenwashing always results in positive organizational benefits over the long run.
d. It can be avoided by not following optional reporting rules.
61. The objective of quality cost management is to find ways to reduce total quality costs to _____, the optimal range
recommended by quality experts.
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a. 2 to 4% of sales
b. 5 to 10% of sales
c. 7 to 8% of sales
d. 9 to 10% of sales
62. _____ are costs incurred because products or services are produced that do not conform to specifications.
a. Control costs
b. Failure costs
c. Detection costs
d. Appraisal costs
63. _____ are incurred to determine whether products and services are conforming to their requirements.
a. Prevention costs
b. Appraisal costs
c. Opportunity costs
d. Sunk costs
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64. Control costs can be subdivided into prevention and:
a. appraisal costs.
b. sunk costs.
c. opportunity costs.
d. failure costs.
65. Which of the following is true of prevention costs?
a. As prevention costs increase, we would expect the costs of failure to decrease.
b. As prevention costs decrease, we would expect the costs of external failure to decrease.
c. As prevention costs increase, we would expect the costs of sustainability reporting to decrease.
d. As prevention costs increase, we would expect the costs of internal failure to increase.
66. Which of the following is a prevention cost?
a. Inspection of materials
b. Field testing
c. Product acceptance
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d. Marketing research
67. Which of the following is an appraisal cost?
a. Retesting
b. Complaint adjustment
c. Field testing
d. Design changes
68. Which of the following is an internal failure cost?
a. Warranties
b. Recalls
c. Field testing
d. Repairs
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69. Which of the following is an external failure cost?
a. Rework
b. Reinspection
c. Prototype inspection
d. Warranties
70. Which of the following is true of internal failure costs?
a. These are costs of preventing or detecting poor quality.
b. These costs are incurred to determine whether products and services are conforming to their requirements.
c. These costs are incurred when lack of conformity to requirements is discovered prior to external sale.
d. These are costs that can be most devastating of all the quality costs.
71. Which of the following is true of external failure costs?
a. These are costs of preventing or detecting poor quality.
b. These are costs that can be most devastating of all the quality costs.
c. These costs are incurred to determine whether products and services are conforming to their requirements.
d. Examples of external failure costs are quality engineering, quality training programs, and quality planning.
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72. When quality costs reach the optimal range of 2 to 4% of sales, control costs typically account for about _____ of total
quality costs.
a. 10 to 15%
b. 80 to 85%
c. 20 to 30%
d. 40 to 50%
73. Planet Company had total sales of $15,000,000 for the fiscal year ending on December 31, 20X1.
Planet’s costs of quality are as follows:
Warranties $600,000
Scrap $450,000
Prototype inspection 90,000
Repairs 300,000
Quality audits 15,000
Product acceptance 150,000
Calculate Planet’s prevention cost for the year.
a. $105,000
b. $510,000
c. $600,000
d. $710,000
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74. Learner Corp. had total sales of $20,000,000 for the fiscal year ending on December 31, 20X1.
Learner’s costs of quality are as follows:
Recalls $700,000
Warranties 500,000
Recruiting 95,000
Reinspection 350,000
Quality training 20,000
Process acceptance 175,000
Field testing 90,000
Calculate Learner’ s appraisal cost for the year.
a. $965,000
b. $510,000
c. $265,000
d. $710,000
75. The financial significance of quality costs can be assessed more easily by expressing these costs as a percentage of:
a. actual sales.
b. net income.
c. gross margin.
d. operating income.
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76. Which of the following is true of an interim quality cost report?
a. At the end of a period, an interim quality cost report compares the actual quality costs for the period with the
budgeted costs.
b. It provides a chart or graph that tracks the change in quality from the beginning of the program to the present.
c. An interim quality cost report highlights the progress trend since the inception of the quality improvement
program.
d. An interim quality cost report does not consider prevention costs.
77. Which of the following is true of a multiple-period quality trend report?
a. It provides management with information concerning the within-period progress measured relative to specific
goals.
b. At the end of a period, it compares actual quality costs for a period with budgeted costs.
c. It provides a chart or graph that tracks the change in quality from the beginning of a quality improvement program
to the present.
d. A multiple-period quality trend report does not consider prevention costs.
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78. Lean manufacturing is concerned with:
a. eliminating waste in manufacturing processes.
b. increasing lead time in manufacturing processes.
c. increasing materials inventory levels in manufacturing processes.
d. eliminating cycle time in manufacturing processes.
79. Which of the following is true of lean manufacturing?
a. Lean manufacturing results in increased human efforts.
b. Lean manufacturing seeks to achieve zero defects.
c. In a lean manufacturing setup, production is organized by function into departments and products are produced in
large batches.
d. In a lean manufacturing setup, there is significant move time and wait time as each batch moves from one
department to another and waits for its turn.
80. The key factors in achieving reduced wait and move times in manufacturing processes are:
a. low setup times and continuous flow manufacturing.
b. high cycle time and traditional manufacturing setup.
c. high wait times and large batches of products.
d. low variety of products and high changeover times.
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81. In lean manufacturing, cell structure of manufacturing is chosen over departmental structure of manufacturing because
it:
a. increases materials inventory levels.
b. increases lead time.
c. decreases product cost.
d. decreases on-time delivery.
82. Which of the following is true of a value stream?
a. A value stream reflects all that is done to bring the product to a customer.
b. A value stream includes only value-added activities.
c. A value stream reflects only the nonvalue-added activities.
d. A value stream is never created for groups of products that use common processes.
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83. In lean manufacturing, _____ are the major enabling factors for producing on demand.
a. low setup times and cellular manufacturing
b. high wait times and large batches of products
c. high lead times and the traditional departmental approach
d. low variety of products and high changeover times
84. Which of the following is true of a demand-pull system of production?
a. A companion to a demand-pull system is JIT purchasing.
b. In a demand-pull system, firms produce for inventory and then try to sell the excess goods they have produced.
c. Traditional manufacturing uses a demand-pull system.
d. In a demand-pull system, efforts are made to create demand for the goods that customers probably may not even
want.
85. Which of the following is true of a demand-push system of production?
a. In a demand-push system, efforts are made to create demand for the goods that customers probably may not even
want.
b. A companion to a demand-push system is JIT purchasing.
c. A demand-push system requires suppliers to deliver parts and materials just in time to be used in production.
d. Lean manufacturing uses a demand-push system.
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86. Which of the following is true of lean accounting?
a. Lean accounting and traditional accounting are used interchangeably.
b. Lean accounting approaches include average costing and the expanded use of nonfinancial measures for
operational control.
c. Lean accounting encourages overproduction and works against the demand-pull system.
d. Lean accounting is an approach designed to support the demand-push system.
87. Assume that facility costs are $350,000 per year for a plant occupying 20,000 square feet. The cost per square foot is
$17.50. A value stream occupying 10,000 square feet would be assigned a cost of $175,000. If the value-stream manager
figures out how to do the same tasks with 5,000 square feet, the cost would be reduced to:
a. $87,500.
b. $77,000.
c. $175,000.
d. $200,500.
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88. Assume that facility costs are $350,000 per year for a plant occupying 20,000 square feet. The cost per square foot is
$17.50. A value stream occupying 10,000 square feet would be assigned a cost of $175,000. If the value-stream manager
figures out how to do the same tasks with 5,000 square feet, the cost would be reduced to $87,500. Any unabsorbed
facility cost would be:
a. deducted from plant as depreciation expenditure.
b. deducted from revenue as a separate item.
c. deducted from capital as an opportunity cost.
d. deducted from rental expenditure in the company’s income statement.
89. The weekly unit product cost for a single-product value stream is calculated by:
a. dividing total actual value-stream costs by units shipped.
b. multiplying actual materials cost by units produced.
c. adding each unit’s materials cost and the average conversion cost.
d. subtracting actual conversion costs from total actual value-stream costs.
90. The weekly unit product cost for multiple-product value streams is calculated by:
a. dividing total actual value-stream costs by units shipped.
b. dividing actual materials cost by units produced.
c. adding each unit’s materials cost to the average conversion cost.
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d. adding actual conversion costs to units produced.
91. Using units shipped in the unit cost calculation for single-product value stream instead of units produced motivates
managers to:
a. produce for inventories.
b. reduce inventories.
c. produce more units than shipped.
d. adapt a demand-push system.
92. Which of the following is true of the duration-based value-stream costing approach?
a. It offers both simplicity and accuracy and, thus, may be well suited for multiple-product value streams.
b. This approach recognizes that some product components take more effort (time) to make than others and thus cost
more.
c. In duration-based costing, an adjustment is made to the average product cost that reflects the differences in
product features and characteristics.
d. Duration-based costing and features and characteristics costing are used interchangeably.
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93. Which of the following is true of the features and characteristics value-stream costing approach?
a. This costing approach offers both simplicity and accuracy and, thus, may be well suited for multiple-product
value streams.
b. This costing approach recognizes that some product components take more effort (time) to make than others and
thus cost more.
c. This costing approach uses a single rate to assign conversion costs and approximates a comprehensive ABC
system based in duration drivers.
d. This costing approach is used interchangeably with the duration-based value-stream costing approach.
94. _____ is the time that a unit of product spends in the value stream, from start to finish.
a. Lead time
b. Wait time
c. Cycle time
d. Move time
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95. A manufacturing cell within a value stream is structured with four processes and associated unit processing times,
which are as follows:
Molding: 9 minutes
Grinding: 20 minutes
Polishing: 6 minutes
Finishing: 3 minutes
How many units can the cell produce per hour on a continuous running basis (production rate)?
a. 3 units
b. 10 units
c. 5 units
d. 2 units
96. A manufacturing cell within a value stream is structured with four processes and associated unit processing times,
which are as follows:
Cutting: 4 minutes
Welding: 10 minutes
Polishing: 6 minutes
Finishing: 5 minutes
How many units can the cell produce per hour on a continuous running basis (production rate)?
a. 15 units
b. 10 units
c. 6 units
d. 5 units
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97. Assume that a value stream in Atlas Company has two products with material costs of $35,000 and $75,000 for a
given week. The conversion costs for the week amounted to $300,000. The units produced for the first product are 15,000
with 14,000 shipped to customers. For the second product, 30,000 units were produced and shipped. Calculate the cost per
unit for the first product. (Note: Round answer to two decimal places.)
a. $9.32 per unit
b. $6.50 per unit
c. $8.68 per unit
d. $3.25 per unit
98. Assume that a value stream in Elite Company has two products with material costs of $40,000 and $80,000 for a given
week. The conversion costs for the week amounted to $360,000. The units produced for the first product are 21,000 with
20,000 shipped to customers. For the second product, 40,000 units were produced and shipped. Calculate the cost per unit
for the first product. (Note: Round to two decimal places.)
a. $9.00 per unit
b. $6.00 per unit
c. $8.00 per unit
d. $3.00 per unit