Q&A Hero

Q: Describe sources of current debt.

Q: What is the link between focused processes and specialization? What kinds of focus are possible?

Q: Warren needs to generate cash flow for his lawn mowing business. What three cash flow activities can he engage to bring in cash for his company?

Q: Why is Harley-Davidson identified as a repetitive manufacturer, not a mass customizer?

Q: Erin, the owner of Sweets To Eat Ice Cream Shoppe, wants to know how her company is operating from a financial perspective. Her CPA has given her the following numbers: Sales $325,000, Operating Profits $50,000, Current Assets $125,000, Current Liabilities $40,000, Total Assets $350,000. The ice cream retail industry norms include Operating Profit Margin 10%, Return on Assets 11% and Current Ratio 2.7. Determine the companys liquidity and compare the value to the industry ratios.

Q: ________ represent an organization's attempt to gain increased efficiency through specialization, which can include, for example, concentrating on certain classes of customers.

Q: Compare and contrast the income statement and balance sheet. What is important to know about each statement to determine how a company performed during the year?

Q: ________ is a rapid, low-cost production process that caters to constantly changing unique customer desires.

Q: The cost of borrowed money

Q: ________ is a process strategy based on a product-oriented production process that uses modules.

Q: Assets whose value declines over time

Q: A financial report showing the amount of profits or losses from a firms operations over a given period of time

Q: The process strategy that is organized around processes to facilitate low-volume, high-variety processes is called a(n) ________.

Q: A measure of a companys relative liquidity

Q: An organization's approach to transforming resources into goods and services is called its ________.

Q: Product focused processes: A) allow more customization, but are not very efficient. B) are desirable because resource needs increase slowly with the complexity of a process. C) are processes that are specialized for relatively few products or customer groups. D) apply only to service firms, not to manufacturers. E) are profitable because customers demand flexibility, not specialization.

Q: Gross fixed assets less accumulated depreciation

Q: The crossover point is that production quantity where: A) variable costs of one process equal the variable costs of another process. B) fixed costs of a process are equal to its variable costs. C) total costs equal total revenues for a process. D) total costs for one process equal total costs for another process. E) the process no longer loses money.

Q: The cost of producing or acquiring goods or services to be sold by a firm

Q: Process X has fixed costs of $10,000 and variable costs of $2.40 per unit. Process Y has fixed costs of $9,000 and variable costs of $2.25 per unit. Which of the following statements is TRUE? A) The crossover point is approximately 6667 units. B) It is impossible for one process to have both of its costs lower than those of another process. C) Process Y is cheaper than process X at all volumes. D) Process X should be selected for very large production volumes. E) Process X is more profitable than process Y and should be selected.

Q: A measure of what percentage of a firms assets is financed by debt

Q: Process A has fixed costs of $1000 and variable costs of $5 per unit. Process B has fixed costs of $500 and variable costs of $15 per unit. What is the crossover point between process A and process B? A) 50 units B) 200 units C) $2,500 D) $5,000 E) $9,500

Q: A distribution of a firms profits to the owners Match the term with its definition. a. Cost of goods sold b. Current ratio c. Debt ratio d. Depreciable assets e. Income statement f. Interest expense g. Inventory h. Net fixed assets

Q: A quasi-custom product: A) gets its apparent customization from the combinations available from a small number of modules. B) is often the output of repetitive focus facilities. C) is a valid description of a fast food sandwich. D) only applies in services. E) All but D are true.

Q: The process of converting inventory to cash

Q: Which of the following characteristics best describes repetitive focus? A) It uses sophisticated scheduling to accommodate custom orders. B) Its output is a standardized product produced from modules. C) Operators are broadly skilled. D) It is widely used for the manufacture of steel. E) low volume, high variety

Q: Owners investments in a company plus cumulative net profits retained in the firm

Q: The impact of financing with debt rather than with equity

Q: Which of the following phrases best describes process focus? A) low volume, high variety B) Finished goods are usually made to a forecast and stored. C) Operators are less broadly skilled. D) high fixed costs, low variable costs E) low inventory

Q: Profits not paid out as dividends over the life of a business

Q: Which of the following phrases best describes product focus? A) low volume, high variety B) Finished goods are usually made to order. C) Processes are designed to perform a wide variety of activities. D) high fixed costs, low variable costs E) high inventory

Q: Which of the following is FALSE regarding repetitive processes? A) They use modules. B) They allow easy switching from one product to the other. C) They are the classic assembly lines. D) They have more structure and less flexibility than a job shop layout. E) They include the assembly of basically all automobiles.

Q: Financing provided by creditors

Q: Harley Davidson: A) utilizes job shops to make each of its modules. B) uses product focused manufacturing. C) uses a large number of modules to build a small number of different bikes. D) uses work cells to feed its assembly line. E) All of the above are true.

Q: A long-term loan to purchase a building or land

Q: Total depreciation taken over time Match the term with its definition. a. Balance sheet b. Debt c. Dividend d. Financial leverage e. Mortgage f. Owners equity g. Retained earnings h. Working capital cycle

Q: Which of the following companies use a mass customization approach? A) Dell B) Align Technology C) Frito-Lay D) Arnold Palmer hospital E) A and B

Q: Borrowed money that must be repaid within 12 months

Q: Align Technology uses a ________ approach to produce clear plastic removable aligners. A) mass customization B) product focus C) process focus D) repetitive focus E) crossover

Q: Assets that can be converted to cash relatively quickly

Q: Goods made to order are typical of ________ and ________ approaches while goods made to forecast are typical of ________ and ________ approaches. A) process, mass customization; repetitive, product B) product, mass customization; repetitive, process C) product, process; repetitive, mass customization D) repetitive, product; mass customization, process E) repetitive, process; mass customization, product

Q: Outstanding credit payable to suppliers

Q: High fixed costs and low variable costs are typical of which approach? A) product B) process C) mass customization D) repetitive E) A and C

Q: Stock shares that represent ownership in a corporation

Q: Frito-Lay is to ________ focus as Harley Davidson is to ________ focus. A) process, repetitive B) product, repetitive C) repetitive, product D) process, product E) product, mass customization

Q: The amount of credit extended to customers that is currently outstanding

Q: One of the similarities between process focus and mass-customization is: A) the volume of outputs. B) the use of modules. C) many departments and many routings. D) the variety of outputs. E) All of the above are similarities.

Q: The cost of a firms building and equipment, allocated over the assets useful life

Q: Arnold Palmer Hospital uses which focus? A) process B) repetitive C) product D) mass customization E) A and D

Q: A measure of how efficiently a firm is using its assets to generate sales Match the term with its definition. a. Accounts payable b. Accounts receivable c. Accumulated depreciation d. Common stock e. Current assets f. Current debt g. Current ratio h. Depreciation expense

Q: An assembly line is an example of a: A) product-focused process. B) process-focused process. C) repetitive process. D) line process. E) specialized process.

Q: Earnings after operating expenses but before interest and taxes are paid

Q: Profits as a percentage of sales

Q: Sales less the cost of goods sold

Q: Which of the following products is likely to be assembled on a repetitive process line? A) automobiles B) custom personal computers C) custom cakes D) steel E) beer

Q: Earnings that may be distributed to the owners or reinvested in the company

Q: Which one of the following products is most likely made in a job shop environment? A) rolls of newsprint B) paper forms C) television sets D) cigarettes E) canned vegetables

Q: A product-focused process is commonly used to produce: A) high-volume, high-variety products. B) low-volume, high-variety products. C) high-volume, low-variety products. D) low-variety products at either high- or low-volume. E) high-volume products of either high- or low-variety.

Q: Earnings after operating expenses and interest expenses but before taxes

Q: Which of the following industries is most likely to have low equipment utilization? A) auto manufacturing B) commercial baking C) television manufacturing D) steel manufacturing E) restaurants

Q: Agreements to repay cash amounts borrowed from banks or other lending sources, plus interest, for periods longer than 12 months

Q: A firms income statement, balance sheets, and cash flow statements Match the term with its definition. a. Cost of goods sold b. Gross profit c. Long-term notes d. Net profits e. Operating profits f. Profit margins g. Profits before taxes h. Total asset turnover

Q: Three of the four types of processes are: A) goods, services, and hybrids. B) manual, automated, and service. C) process focus, repetitive focus, and product focus. D) modular, continuous, and technological. E) input, transformation, and output.

Q: A measure of the rate of return that owners receive on their equity investment, calculated by dividing net profits by owners equity

Q: A job shop is an example of a(n): A) repetitive process. B) continuous process. C) line process. D) intermittent process. E) specialized process.

Q: A measure of how well a firm is controlling its cost of goods sold and operating expenses relative to sales, determined by dividing operating profits by sales

Q: The term focused processes refers to the quest for increased efficiency, whether in goods or services, that results from specialization.

Q: The tool that calculates which process has the lowest cost at any specified production volume is a crossover chart.

Q: An accounting method of recording profits when cash is received and recording expenses when they are paid

Q: The assembly line is a classic example of a repetitive process.

Q: The degree to which a firm has working capital available to meet maturing debt obligations

Q: Harley-Davidson, because it has so many possible combinations of products, utilizes the process strategy of mass customization.

Q: A measure of a firms profitability relative to the amount of its assets, determined by dividing operating profits by total assets

Q: The typical full-service restaurant uses a product-focused process.

Q: An accounting method of recording profits when earned and expenses when incurred, whether or not the profits have been received in cash or the expenses paid

Q: In process-focused facilities, utilization of facilities is low.

Q: Agreements to repay cash amounts borrowed from banks or other lending sources within 12 months or less Match the term with its definition. a. Accrual-basis accounting b. Cash-basis accounting c. Current ratio d. Financial statements e. Liquidity f. Operating profit margin g. Return on assets h. Return on equity

Q: Intermittent processes are organized around processes.

Q: Depreciable assets at their original cost, before any depreciation expense has been taken

Q: A firm's process strategy is its approach to transforming resources into goods and services.