46.
Which of the following is
not
commonly used to measure product quality in a just-in-time
system?
47.
An effective just-in-time system will include:
48.
Cycle time includes:
49.
During cycle time, value is added only during:
50.
Which of the following elements in a product’s cycle time should be maximized?
51.
Four categories of costs associated with product quality are:
52.
Which of the following is
not
an example of the cost of quality?
53.
Which of the following is
not
a prevention cost?
54.
Quality costs do
not
include:
55.
External failure costs include:
The Abrams Corporation incurred the following quality costs for the year ending December
31, 2015:
56.
Refer to the information above. What are the total prevention costs for the Abrams
Corporation?
57.
Refer to the information above. What are the total appraisal costs for the Abrams
Corporation?
58.
Refer to the information above. What are the total internal failure costs for the Abrams
Corporation?
59.
Refer to the information above. What are the total external failure costs for the Abrams
Corporation?
60.
Refer to the information above. As a percentage of total costs, which quality cost category
is the highest?
19–27
Essay Questions
61.
Accounting terminology
Listed below are eight technical accounting terms introduced or emphasized in this
chapter:
Each of the following statements may (or may not) describe one of these technical terms.
In the space provided below each statement, indicate the accounting term described, or
answer “None” if the statement does not correctly describe any of the terms.
_____ (a) The process of using activity-based costs to help reduce or eliminate non-value-
added activities.
_____ (b) Can be eliminated without affecting the desirability of the product from the
perspective of the customer.
_____ (c) The length of time for a product to pass completely through a specific
manufacturing process.
_____ (d) If eliminated, the desirability of the product to consumers is decreased.
_____ (e) Consideration of all potential resources that will be consumed by a product from
development through disposal.
_____ (f) A method in which a product’s cost is determined by subtracting a fixed profit
margin from its selling price.
_____ (g) An approach that explicitly monitors quality costs and rewards quality enhancing
behavior.
62.
Identifying value-added activities
Pomme Farms operates an apple cider press. The production of cider involves the following
activities:
(1.) Inspect incoming shipments of apples.
(2.) Store apples in adjacent barn until needed.
(3.) Transport apples from storage barn to the press building.
(4.) Load apples onto the conveyor leading to the press.
(5.) Run press.
(6.) Fill bottles with completed cider.
(7.) Dispose of waste from press.
(8.) Store filled bottles until sale.
Requirements:
(a.) Identify Pomme’s value-added activities.
(b.) Identify any non-value added activities performed by Pomme.
63.
Value-added and non-value-added activities
Explain the distinction between value-added and non-value added activities. Provide an
example of each.
64.
Target costing
Ray-Dee, Inc. is considering the introduction of a new deluxe quality stereo tabletop radio.
This radio will produce exceptional sound quality through new speaker technology. Market
research indicates that customers would be willing to pay $400 for a radio of the quality
considered. Ray-Dee requires a 30% return on sales for all its products.
Required: Compute Ray-Dee’s target cost for the radio under consideration.
65.
Pool-Glow, Inc. has developed a new light for lighting swimming pools. After doing market
research, it has determined that customers would be willing to pay $140 for this light. Pool-
Glow seeks to earn 25% profit on the light. At present, Pool-Glow makes an old style light
for $101.25, which sells for $130.
(1.) What must the target cost be in order to earn the 25% profit that the company
demands?
(2.) If Pool-Glow can adjust its costs to the target cost, the company estimates that it can
sell 50,000 lights. What would Pool-Glow’s profit be at this point?
(3.) How many of the old style lights would have to be sold to reach the same profit?
66.
Just-in-time manufacturing
Candycane Co. is trying to determine how long it takes for one of its products to pass
through the production process. The following information was assembled regarding how
many days the product spends in various production activities:
(a) Which of the above activities are value-added activities?
(b) What is Candycane’s total cycle time?
(c) Determine Candycane’s manufacturing efficiency ratio.
67.
JIT systems’ manufacturing efficiency ratio
Methodical Corporation is considering the implementation of a JIT inventory system. The
company recently analyzed its cycle time to determine the average number of days spent in
each activity of its production process. A summary of the analysis is shown below:
(a) Methodical’s value-added production activities include: ________________________.
(b) Methodical’s total cycle time is __________ days.
(c) Methodical’s manufacturing efficiency ratio is __________%.
(d) Which activities might be reduced or eliminated should Methodical implement a JIT
system?
68.
JIT manufacturing
Briefly explain the nature and goals of a JIT manufacturing system.
69.
Components of the total cost of quality
Explain how it is possible to reduce the total cost of quality by increasing the amount spent
on prevention and appraisal activities.
70.
Cost of quality
Name four components of the cost of quality and list three examples of each.