Q&A Hero

Q: Andrea is working on forecasting her financial statements for her consulting business. Discuss three suggestions for Andrea to make her forecasting more effective.

Q: Standard time is always greater than normal time, due to the inclusion of allowances for personal time, delay, and fatigue.

Q: Discuss factors that drive profits in the order that they appear on the income statement.

Q: Current assets less current liabilities

Q: Normal time is always less than the average observed time.

Q: A method of forecasting asset requirements

Q: The allowance factor that increases normal time to standard time compensates for inadequate worker training and lack of worker dexterity.

Q: A listing of cash receipts and cash disbursements, usually for a relatively short time period

Q: Short-term debts, such as accounts payable, that automatically increase in proportion to a firms sales

Q: A time-study procedure involves timing a sample of a worker's performance and using it as a basis for setting a standard time.

Q: A short-term loan

Q: The classical stopwatch study, or time study, was originally proposed by Western Electric's Hawthorne Commission in the 1920s.

Q: Standard time may be less than average observed time.

Q: Statements that project a firms financial performance and condition, including projected profits, assets and financing requirements, and cash flows

Q: Jake has prepared pro forma financial statements for his landscaping business. At the minimum, how often should he check results and make modifications as needed? a. annually b. quarterly c. monthly d. weekly Match the term with its definition. a. Cash budget b. Current ratio c. Line of credit d. Net working capital e. pro forma financial statements f. percentage-of-sales technique g. spontaneous debt financing

Q: The preferred method of choice for setting labor standards is to base them on historical experience.

Q: Willar expects his new business to support him and his family. This means his asset and financing requirements will: a. increase. b. decrease. c. remain the same. d. depend on the size of his family.

Q: Labor standards based on historical experience are relatively inexpensive to obtain.

Q: Which source of information would be the most inclusive for an entrepreneur determining information to complete the financial statements? a. Attend trade shows b. Contact the industry association c. Examine RMA Annual Statement Studies d. Talk to others in the industry

Q: One use of labor standards is to determine what constitutes a fair day's work.

Q: Projecting financials may present a challenge because in a startup business, a. things seldom goes as planned. b. things always go as planned. c. expenses are too complex. d. expenses are simple.

Q: Two uses of labor standards are to determine the labor content of items produced and to determine staffing needs.

Q: Tony operates a computer retail business. Based on the industry, how often should sales projections be for the company in projecting sales? a. monthly for Year 1; annual for Years 2 and 3 b. annual for Year 1; quarterly for Years 2 and 3 c. monthly for Year 1; quarterly for Years 2 and 3 d. annual for Year 1, monthly for Years 2 and 3

Q: The purpose of labor standards is to accurately define the skills required to complete a job.

Q: Even though Miriam projected an annual positive cash flow, she may run out of cash if: a. customers use debit cards for their purchases. b. her sales are seasonal. c. sales exceed her projections. d. she finds a less expensive supplier.

Q: Describe how the visual workplace can increase information flow, improve efficiency, and eliminate non-value-adding activities. Support your argument with a few examples.

Q: Which of the following is a visual signal at a machine that notifies support personnel about the machine's status? A) Andon B) Endon C) Indon D) Ondon E) Undon

Q: No single planning document is more important in the life of a company than the a. income statement. b. cash budget. c. balance sheet. d. corporate charter.

Q: The visual workplace: A) uses low-cost visual devices to share information. B) is an effective means of rapid communication in a dynamic workplace. C) replaces difficult-to-understand paperwork. D) eliminates non-value-added activities by making problems and standards visual. E) All of the above describe the visual workplace.

Q: Roland has already projected his companys sales. The next step in forecasting his companys income is to project: a. operating expenses. b. interest expense. c. taxes. d. cost of goods sold.

Q: "Visual workplace" is a term coined by Hawthorne, and it refers to the need for proper lighting at employee workstations.

Q: Verlin wants to avoid a common mistake often made by new entrepreneurs. What advice would you give him? a. Spend as little as possible. b. Carry no inventory. c. Make sure he has adequate financing. d. Do without anything that is not absolutely essential.

Q: Kanbans and andons are both elements of the visual workplace, because they are visual signals that replace printouts and paperwork.

Q: Zeno had a great idea but no cash so he asked the bank for a loan to finance the entire operation. It seems he forgot that a bank would never provide _______ % of the firms financing. a. 25 b. 50 c. 75 d. 100

Q: What are operations charts used for?

Q: A simple listing of expected cash inflows and outflows provides the entrepreneur with a(n) a. income statement. b. cash budget. c. pro forma balance sheet. d. net equity computation.

Q: What is methods analysis?

Q: Jills business has current assets of $50,000 and current liabilities of $25,000. Which statement is true about the companys current ratio? a. The ratio is 50% and is acceptable for most industries. b. The ratio is 2 and is acceptable for most industries. c. The ratio is $25,000 and is not acceptable for most industries. d. Current ratio can not be determined from the information given.

Q: ________ are drawings used to analyze movement of people or material.

Q: Mark wants to make sure he does not run out of cash so he is preparing a monthly cash budget. After determining the percentage of cash collections by month, he should a. estimate the amount and timing of cash disbursements. b. calculate cash flow from operations. c. determine the end-of-month cash balance. d. determine beginning-of-the-month cash balance.

Q: Activity charts help analyze: A) movement of people or material. B) utilization of an operator and machine. C) body movements. D) activities that can cause injuries. E) unnecessary micro-motions.

Q: As her accounts payable and accrued expenses rose along with her firms sales, Ariel noticed that ________ occurs. a. spontaneous debt financing b. trade credit financing c. escalating debt d. asset-based financing

Q: The greater a firms sales, the greater need for financing because of greater _____ requirements. a. asset b. employee c. marketing d. operational

Q: Flow diagrams are used to analyze: A) movement of people or material. B) utilization of an operator and machine. C) body movements. D) time taken by various activities. E) unnecessary micro-motions.

Q: Methods analysis employs which of the following charts in its analysis of the movement of workers and materials? A) micro-motion chart B) flow diagram C) activity chart D) man-machine chart E) movement chart

Q: Yvonne is planning a coffee shop. The cost of producing the coffee should be included in the ________ section of the pro forma financial statement. a. variable expense b. amount of sales c. cost of goods sold d. operating expense

Q: James is preparing his forecasts for the coming year. What kind of scenarios should he prepare when forecasting and budgeting? a. best and worst case scenarios b. most-likely and break-even case scenarios c. break-even and worst case scenarios d. most-likely and best case scenarios

Q: The phrase, "designed to show economy of motion by pointing out wasted motion and idle time (delay)," describes which of the following? A) a flow diagram B) an activity chart C) an operations chart D) a process chart E) a work sample

Q: Which of the following is used by methods analysis in analyzing body movement at the workstation level? A) MTM chart B) flow diagram C) operations chart D) process chart E) improvement chart

Q: Marcia uses other peoples money whenever possible to finance her business. She prefers to minimize and control rather than maximize and own. This practice is known as: a. high-stepping. b. bootstrapping. c. unethical business practice. d. taking advantage of others.

Q: Methods analysis focuses on: A) the design of the machines used to perform a task. B) establishing time standards. C) reducing the number of skills needed for the completion of a task. D) issues such as the movement of individuals or material. E) evaluating training programs to see if they are efficient.

Q: As Willards business grows and propsers, his companys total assets requirements will equal ___________. a. total sources of financing less owners investment and retained earnings b. spontaneous debt financing plus bank loans plus owners investment less retained earnings c. total sources of financing less net assets and owners investment d. spontaneous debt financing plus bank loans plus owners investment plus retained earnings

Q: D&R Products forecasts that it will require $10,000 for equipment and depreciation will be over 5 years. The $10,000 will be reflected in the balance sheet as _____. a. inventory b. gross fixed assets c. net fixed assets d. accounts payable

Q: Which of the following is not analyzed using methods techniques? A) movement of capital B) body movement C) movement of individuals D) movement of material E) crew activity

Q: David has a company decorating houses for the holidays. He has secured a $25,000 line of credit from his bank. For which purpose is David more likely to use this credit line? a. a warehouse to store decorations until they are sold b. labor to install the decorations in November c. a truck with a ladder to put up lights d. a full-time, year-round office person to answer phones and take orders

Q: An operations chart, or right-hand/left-hand chart, points out wasted motion and idle time.

Q: Alex wants to make sure he has enough liquid assets to pay his current bills. To do this, he should calculate his firms: a. debt ratio. b. cash flow statement. c. current ratio. d. asset turnover ratio.

Q: Describe some impacts of noise in the workplace.

Q: Often called human factors, the study of work is known as ________.

Q: D&R Products forecast a first year asset requirement of $143,500; therefore, the total debt requirement is a. $143,500. b. a set percentage of sales. c. equal to the current ratio. d. dependent on the owners equity amount.

Q: One of the elements of ergonomics is A) allocating work time based on economic studies. B) the cost justification of technology. C) designing tools and machines that facilitate human work. D) assembly line balancing. E) the establishment of time standards.

Q: The assets-to-sales relationship tends to be relatively constant within an industry, allowing for a(n) _____ technique to be utilized in projecting asset requirements. a. percentage-of-sales b. bootstrap forecasting c. asset turnover ratio d. discounted sales

Q: Ergonomics is a branch of economics that deals with costs of scheduling workers.

Q: Maria is projecting sales for her company for the upcoming new year. To be financially effective, she a. can over-project for sales if she has done research. b. should develop realistic sales projections. c. would be better served by under-projecting sales so she wont be disappointed. d. ignore projections until after 1 year of operations when she can realistic project.

Q: The physical environment in which employees work may affect the quality of work life, but it does not affect their performance and safety.

Q: Investors would like to know if Arthur's new business will have adequate cash flows. Arthur can provide this information in a. pro forma financial statements. b. historical financial statements. c. pro bono financial statements. d. quid pro quo financial statements.

Q: Identify Hackman and Oldham's five desirable characteristics of job design.

Q: Where should Rhonda put the administrative expenses for her business when she prepares the financial forecasts? a. Administrative costs are subtracted from amount of sales. b. In the operating expenses section c. Administrative costs are included in cost of goods sold d. In the interest expense section

Q: Identify the five components of job design.

Q: The method of forecasting asset requirements is called the ____________ technique. a. percentage-of-inventory b. percentage-of-equity c. percentage-of-debt d. percentage-of-sales

Q: What impact did the Hawthorne studies have on human resource strategy?

Q: Entrepreneurs determine financial requirements based on ________. a. predictions b. suggestions c. assumptions d. projections

Q: Which action will be a concern for a prospective investor? a. Having too much cash in a bank account b. Searching for information with a trade association c. Inadequate provision for personal expenses of the entrepreneur d. Obtaining a line of credit before beginning operations

Q: It is said that job expansion has both a vertical component and a horizontal component. Explain, with reference to such terms as job enrichment, job rotation, and job enlargement.

Q: Identify five limitations of job expansion.

Q: Liquid assets include a. accounts payable. b. equipment. c. working capital. d. office supplies.

Q: Station Task Time (seconds) Time left (seconds) Ready tasks A,B,C,D 1 B 66. A,C,D C 25. 41. A,D A 20. 21. D,E D 10. 11. E,F 2 E 55. 41. F,G F 30. 11. G 3 G 25. 71. H H 40. 31. Summary Statistics Cycle time 96 seconds Time allocated (cycle time * #) 288 seconds/cycle Time needed (sum of task times) 235 seconds/unit Idle time (allocated-needed) 53 seconds/cycle Efficiency (needed/allocated) 81.59722% Balance Delay (1-efficiency) 18.40278% Min (theoretical) # of stations 3 Key Term: Assembly-line balancing 49) A company is trying to balance production between 3 workstations on an assembly line. Currently there are 5 tasks that need to be performed. These tasks, ABCDE, have required times of 2 minutes, 4 minutes, 1 minutes, 3 minutes, and 10 minutes, respectively. The assembly line needs to produce 40 units per day to meet demand and can work for up to 8 hours each day. (a) What is the required cycle time? (b) What is the theoretical minimum # of workstations? (c) Assign the tasks according to the shortest task time heuristic. Answer: (a) Required cycle time = Production time available/Units required = 8 hours * 60 minutes / 40 units = 12 minutes (b) Minimum # of workstations = Sum of task times/Cycle time = (2 + 4 + 1 + 3 + 10)/12 = 1.667 stations = 2 stations (c) Workstation A would be assigned Task C for a total of 1 minute, Task A for a total of 3 minutes, Task D for a total of 6 minutes, Task B for a total of 10 minutes. Task E cannot be assigned because 10 + 10 > 12 minutes. Therefore Task E would be assigned to station B for a total of 10 minutes. Station C would have no assignment. The assignment method of Part (c) creates the optimum assignment (2 workstations = theoretical minimum), so the third workstation is not needed. Key Term: Assembly-line balancing 50) An assembly line is assigned as follows. Station 1- task A, B, and C. Station 2- task D. Station 3- task E and F. The task times are 7, 3, 2, 9, 4, and 5 minutes respective to A, B, C, D, E, and F. (Assume that there is no precedence relationships between the tasks, i.e. they can be performed in any order) (a) Calculate the efficiency. (b) What would the assignment of tasks to stations be using the shortest processing time heuristic (assuming the current maximum station time remains the cycle time)? Answer: (a) Efficiency = Sum of task time / (# Stations ∗ Longest Station duration) = (7 + 3 + 2 + 9 + 4 + 5)/(3 ∗ 12)= 83.3% (b) Station 1 would be assigned task C for a total of 2 minutes, task B for a total of 5 minutes, Task E for a total of 9 minutes. Task F cannot be assigned because the total would be 14 minutes which is greater than the 12 maximum. Therefore Station 2 would be assigned task F for a total of 5 minutes and task A for a total of 12 minutes. Finally station 3 would be assigned task D for a total of 9 minutes. Key Term: Assembly-line balancing

Q: For the typical small firm, the primary source of equity capital for financing growth is a. operating profits. b. outside investors. c. spontaneous debt financing. d. retained earnings.

Q: Mark follows the cash budget like it was carved in stone. He has fallen prey to the one real danger in over-reliance on a cash budget: a. inflexibility. b. pliability. c. exaggeration. d. errors.

Q: Station Task Time (minutes) Time left (minutes) Ready tasks A 1 A 69 0.735 B B 0.55 0.185 C,D,E,F 2 F 1.1 0.325 C,D,E 3 C 0.92 0.505 D,E 4 E 0.7 0.725 D D 0.59 0.135 G 5 G 0.75 0.675 H H 0.43 0.245 I 6 I 0.29 1.135 Summary Statistics Cycle time 1.425 minutes Time allocated (cycle time * #) 8.549999 minutes/cycle Time needed (sum of task times) 6.02 minutes/unit Idle time (allocated-needed) 2.529999 minutes/cycle Efficiency (needed/allocated) 70.40936% Balance Delay (1-efficiency) 29.59064% Min (theoretical) # of stations 5 Key Term: Assembly-line balancing 47) An assembly line with 11 tasks is to be balanced. The longest task is 2.4 minutes, the shortest task is 0.4 minutes, and the sum of the task times is 18 minutes. The line will operate for 600 minutes per day. (a) Determine the minimum and maximum cycle times. (b) What range of output is theoretically possible for the line? (c) What is the minimum number of stations needed if the maximum output rate is to be sought? (d) What cycle time will provide an output rate of 200 units per day? Answer: (a) Minimum cycle time is 2.4 minutes. Maximum cycle time is 18 minutes. (b) Maximum output is 600/2.4 = 250; minimum output is 600/18 = 33.3. (c) For maximum output, 18/2.4 = 7.5 or 8 stations will be needed. (d) To produce 200 units per day requires a 3-minute cycle time. Key Term: Assembly-line balancing 48) A facility is trying to set up an assembly line, and has identified the various tasks, and their relationship to each other, as shown in the following table. Managers wish to produce 600 units per day, working two 8-hour shifts. Task Preceding Task Time to perform (sec.) A -- 20 B -- 30 C -- 25 D -- 10 E A 55 F D, B, C 30 G E 25 H F, G 40 (a) Draw a network diagram of precedence relationships. (b) Compute the required cycle time per unit in seconds. (c) Compute the minimum number of workstations required to produce 600 units per day. (d) Balance this line using the longest processing time heuristic. (e) What is the efficiency of the line obtained in part (d)? Answer: (a) The precedence diagram appears below. (b) Required cycle time is 480(2)/600 = 1.6 minutes or 96 seconds. (c) 235/96 = 2.45 or 3 workstations are needed. (d) The computer output places tasks A-B-C-D in station 1, E-F in station 2, and G-H in station 3. (e) Efficiency is about 82 percent.