Q&A Hero

Q: Nebraska Co. is reviewing a capital investment of $100,000. This project's projected cash flows over a five-year period are estimated at $35,000 each year. Required: (a) Calculate the payback period. (b) Calculate the break-even time. Assume a 12% hurdle rate and use the table below: Present Value Periods of 1 at 12% 1"u00a6"u00a6 0.8929 2"u00a6"u00a6 0.7972 3"u00a6"u00a6 0.7118 4"u00a6"u00a6 0.6355 5"u00a6"u00a6 0.5674 (c) Using the results in (a) and (b), make a recommendation for the project.

Q: In mass service and service factory quadrants of the service process matrix, the operations manager could focus on all of the following except A) automation B) standardization C) tight quality control D) removing some services E) customization

Q: In mass service and professional service, the operations manager should focus on A) automation B) equipment maintenance C) sophisticated scheduling D) human resources E) all of the above

Q: Which of the following is not a strategy for improving service productivity? A) self-service B) automation C) scheduling D) separation E) mass customization

Q: Strategies for improving productivity in services are A) separation, self-service, automation, and scheduling B) lean production, strategy-driven investments, automation, and process focus C) reduce inventory, reduce waste, reduce inspection, and reduce rework D) high interaction, mass customization, service factory, and just-in-time E) none of the above

Q: When the amount invested differs substantially across projects, NPV is of limited value for comparison purposes. You have evaluated three projects of substantially different investment amounts using the net present value (NPV) method. How would you decide which one of the projects to select?

Q: You have evaluated three projects of similar investment amount and risk using the net present value (NPV) method. How would you decide which one of the projects to select?

Q: A drawing of the movement of material, product, or people is a A) flowchart B) process chart C) service blueprint D) process map E) none of the above

Q: Service blueprinting A) provides the basis to negotiate prices with suppliers B) mimics the way people communicate C) determines the best time for each step in the process D) focuses on the provider's interaction with the customer E) shows how Ishikawa techniques can be added to improve quality

Q: One fundamental difference between a process chart and a process map is that A) the process chart uses a time dimension, while a process map is not time-oriented B) the process chart includes the supply chain, while the process map stays within an organization C) the process chart is more like a table, while the process map is more like a schematic diagram D) the process chart focuses on the customer and on the provider's interaction with the customer, while the process map does not deal directly with the customer E) None of these is true, because a process chart and a process map are the same thing.

Q: Value Stream Mapping A) is a variation on time function mapping B) examines the supply chain to determine where value is added C) extends time function mapping back to the supplier D) starts with the customer and works backwards E) All of the above are true.

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: 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: 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; there is no crossover point. 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: In using a capital budgeting method that takes the time value of money into consideration, management must consider a hurdle rate in making its decisions. What is a hurdle rate? What factors does management have to consider in selecting a hurdle rate?

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. The crossover point between process A and process B is A) 50 units B) 200 units C) $2,500 D) $5,000 E) $9,500

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) is only possible when the focus strategy of service productivity improvement is in use E) All but D are true.

Q: Utilization in process-oriented facilities is frequently low because A) the postponement strategy for improving service productivity is being used B) scheduling in process-oriented facilities is not very complex C) with high fixed costs, utilization is not very important D) excess capacity for peak demands is desirable E) low raw material inventories cause machines to be idled

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) Its costs are often known only after a job is done.

Q: A; 2. D; 3. B; 4. F; 5. C; 6. E; 7. G

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 modestly skilled D) high fixed costs, low variable costs E) raw material inventories are low relative to the value of the product

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) raw material inventories are high relative to the value of the product

Q: Capital budgeting decisions are risky because all of the following are true except: A.The outcome is uncertain. B.Large amounts of money are usually involved. C.The investment involves a long-term commitment. D.The decision could be difficult or impossible to reverse. E.They rarely produce net cash flows.

Q: When done correctly, mass customization A) increases pressure on supply-chain performance B) helps eliminate the guesswork that comes with sales forecasting C) drives down inventories D) increases pressure on scheduling E) all of the above

Q: The process of analyzing alternative long-term investments and deciding which assets to acquire or sell is known as: A.Planning and control. B.Capital budgeting. C.Variance analysis. D.Master budgeting. E.Managerial accounting.

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: Capital budgeting is the process of analyzing: A.Cash outflows only. B.Short-term investments. C.Long-term investments. D.Investments with certain outcomes only. E.Operating revenues.

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: Nestor Company is considering the purchase of an asset for $100,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Compute the break-even time (BET) period for this investment. (Round to two decimal places.) Annual Net Cash Flows Present Value of 1 at 10% Year 0 1.0000 Year 1 $40,000 .9091 Year 2 $40,000 .8264 Year 3 $35,000 .7513 Year 4 $35,000 .6830 Year 5 $30,000 .6209 A.2.85 years. B.2.57 years. C.3.17 years. D.2.98 years. E.3.62 years.

Q: Which of the following transformations generally has the highest equipment utilization? A) process-focused process B) repetitive process C) product-focused process D) specialized process E) modular process

Q: Poe Company is considering the purchase of new equipment costing $80,000. The projected net cash flows are $35,000 for the first two years and $30,000 for years three and four. The revenue is to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Poe requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity for different periods is presented below. Compute the net present value of the machine. Present Value Present Value of an Periods of 1 at 10% Annuity of 1 at 10% 1 0.9091 0.9091 2 0.8264 1.7355 3 0.7513 2.4869 4 0.6830 3.1699 A.$(15,731). B.$(4,896). C.$15,731. D.$4,896. E.$23,775.

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: Smooth FM Radio uses a __________ approach when it mixes pre-recorded local segments with its national music blocks. A) mass customization B) product focus C) process focus D) repetitive focus E) both D and A

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: A machine costs $180,000 and will have an eight-year life, a $20,000 salvage value, and straight-line depreciation is used. Management estimates the machine will yield an after-tax net income of $12,500 each year.. Compute the accounting rate of return for the investment. A.12.5%. B.26.8%. C.11.8%. D.10.8%. E.22.5%.

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: Swift movement through the facility is typical of goods in which approach? A) product B) process C) mass customization D) repetitive E) A and C

Q: Flexible equipment with rapid changeovers is most closely associated with which approach? A) product B) process C) mass customization D) repetitive E) A and C

Q: Tressor Company is considering a 5-year project. The company plans to invest $90,000 now and it forecasts cash flows for each year of $27,000. The company requires that investments yield a discount rate of at least 14%. Selected factors for a present value of an annuity of 1 for five years are shown below: Present value of an annuity Interest rate of $1 factor for year 5 10% 3.7908 12% 3.6048 14% 3.4331 Calculate the internal rate of return to determine whether it should accept this project. A.The project should be accepted because it will earn more than 14%. B.The project should be accepted because it will earn more than 10%. C.The project will earn more than 12% but less than 14%. At a hurdle rate of 14%, the project should be rejected. D.The project should be rejected because it will earn less than 14%. E.The project should be rejected because it will not earn exactly 14%.

Q: One of the similarities between repetitive focus and mass customization is A) the wide variety of outputs B) module inputs C) the process layout D) the standard cost E) the high volume of outputs

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

Q: One of the similarities between process focus and mass-customization is A) the volume of outputs B) the process layout C) the standard cost D) the variety of outputs E) All of the above are similarities

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

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: Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $15,000 and will produce cash flows as follows: End of Investment Year A B 1 $8,000 $0 2 8,000 0 3 8,000 24,000 The present value factors of $1 each year at 15% are: 1 "u00a6"u00a6"u00a6"u00a6"u00a6..0.8696 2 "u00a6"u00a6"u00a6"u00a6"u00a6. 0.7561 3 "u00a6"u00a6"u00a6"u00a6"u00a6. 0.6575 The present value of an annuity of $1for 3 years at 15% is 2.2832 The net present value of Investment B is: A.$780. B.$(15,780). C.$9,000. D.$39,797 E.$(5,918).

Q: Which of the following products is likely to be assembled on a repetitive process line? A) automobiles B) personal computers C) dishwashers D) television sets E) all of the above

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

Q: Turk Manufacturing is considering purchasing two machines. Each machine costs $9,000 and will produce cash flows as follows: End of Machine Year A B 1 $5,000 $1,000 2 4,000 2,000 3 2,000 11,000 Turk Manufacturing uses the net present value method to make the decision, and it requires a 15% annual return on its investments. The present value factors of 1 at 15% are: 1 year, 0.8696; 2 years, 0.7561; 3 years, 0.6575. Which machine should Turk purchase? A.Only Machine A is acceptable. B.Only Machine B is acceptable. C.Both machines are acceptable, but A should be selected because it has the greater net present value. D.Both machines are acceptable, but B should be selected because it has the greater net present value. E.Neither machine is acceptable.

Q: The following present value factors are provided for use in this problem. Periods Present Value Present Value of an of $1 at 8% Annuity of $1 at 8% 1 0.9259 0.9259 2 0.8573 1.7833 3 0.7938 2.5771 4 0.7350 3.3121 Xavier Co. wants to purchase a machine for $37,000 with a four year life and a $1,000 salvage value. Xavier requires an 8% return on investment. The expected year-end net cash flows are $12,000 in each of the four years. What is the machine's net present value (round to the nearest whole dollar)? A.$3,480 B.$2,745. C.$40,480. D.$(3,480). E.$(2,745).

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

Q: An organization's process strategy A) will have long-run impact on efficiency and flexibility of production B) is the same as its transformation strategy C) must meet various constraints, including cost D) is concerned with how resources are transformed into goods and services E) All of the above are true.

Q: Vextra Corporation is considering the purchase of new equipment costing $35,000. The projected annual cash inflow is $11,000, to be received at the end of each year. The machine has a useful life of 4 years and no salvage value. Vextra requires a 12% return on its investments. The present value of an annuity of $1 for different periods follows: Periods 12 Percent 1 0.8929 2 1.6901 3 2.4018 4 3.0373 What is the net present value of the machine (rounded to the nearest whole dollar)? A.$(33,410). B.$(3,100). C.$35,000. D.$3,410. E.$(1,590).

Q: In selecting new equipment and technology, decision-makers look for flexibilitythe ability to respond with little penalty in time, cost, or customer value.

Q: Butler Corporation is considering the purchase of new equipment costing $30,000. The projected annual after-tax net income from the equipment is $1,200, after deducting $10,000 for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of 3 years and no salvage value. Butler requires a 12% return on its investments. The present value of an annuity of 1 for different periods follows: Periods 12 Percent 1 0.8929 2 1.6901 3 2.4018 4 3.0373 What is the net present value of the machine? A.$24,018. B.$(3,100). C.$30,000. D.$26,900. E.$(29,520).

Q: Processes can be environmentally friendly and socially responsible while still contributing to profitable strategies.

Q: Successful process redesign focuses on departmental areas where small, continuous improvements can be made.

Q: Optical checkout scanners and ATMs are examples of technology's impact on services.

Q: Production technology has had a major impact on services, but as yet there has been little reduction in service labor requirements.

Q: Flexible manufacturing systems, because of easily changed control programs, are able to perform such tasks as manufacturing one-of-a-kind parts economically.

Q: The following data concerns a proposed equipment purchase: Cost $144,000 Salvage value $ 4,000 Estimated useful life 4 years Annual net cash flows $ 46,100 Depreciation method Straight-line The annual average investment amount used to calculate the accounting rate of return is: A.$72,000 B.$70,000 C.$37,000 D.$74,000 E.$48,950

Q: Automated storage and retrieval systems are commonly used in distribution facilities of retailers.

Q: One use of camera-and-computer-based vision systems is to replace humans doing tedious and error-prone visual inspection activities.

Q: Process control is the use of information technology to monitor and control a physical process.

Q: Watson Corporation is considering buying a machine for $25,000. Its estimated useful life is 5 years, with no salvage value. Watson anticipates annual net income after taxes of $1,500 from the new machine. What is the accounting rate of return assuming that Watson uses straight-line depreciation and that income is earned uniformly throughout each year? A.6.0%. B.8.0%. C.8.5%. D.10.0%. E.12.0%.

Q: An example of the postponement strategy for improving service productivity is having the customer wait until you have sufficient time to serve the customer.

Q: Carmel Corporation is considering the purchase of a machine costing $36,000 with a 6-year useful life and no salvage value. Carmel uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is Carmel's average investment? A.$ 6,000. B.$ 7,000. C.$18,000. D.$21,000. E.$36,000.

Q: Professional services typically require low levels of labor intensity.

Q: Process maps use distance, but not time, to show the movement of material, product, or people through a process.

Q: Time-function mapping is a flowchart with time added to the horizontal axis.

Q: After-tax net income divided by the average amount invested in a project, is the: A.Net present value rate. B.Payback rate. C.Accounting rate of return. D.Earnings from investment. E.Profit rate.

Q: A process map with the addition of a time axis becomes a process chart.

Q: Activity times should not be included in a service blueprint.

Q: Service blueprinting is a process analysis technique that focuses on the customer and the provider's interaction with the customer.

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

Q: A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,000 per year plus depreciation of $4,000 per year. The company's tax rate is 40%. What is the approximate accounting rate of return for the machine? A. 13%. B. 17% C. 8% D. 27% E. 10%

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

Q: One essential ingredient of mass customization is modular design.