Q&A Hero

Q: Elliot Company can sell all of its products A and Z that it can produce, but it has limited production capacity. It can produce 8 units of A per hour or 10 units of Z per hour, and it has 20,000 production hours available. Contribution margin per unit is $12 for A and $10 for Z. What is the most profitable sales mix for Elliot Company? A.84,000 units of A and 60,000 units of Z. B.48,000 units of A and 80,000 units of Z. C.60,000 units of A and 100,000 units of Z. D.120,000 units of A and 0 units of Z. E.0 units of A and 200,000 units of Z.

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

Q: Cornish Company had the following results of operations for the past year: Sales (20,000 units at $22) $440,000 Direct materials and direct labor $200,000 Overhead (40% variable) 100,000 Selling and administrative expenses (all fixed) 92,000 (392,000 ) Operating income $ 48,000 A foreign company (whose sales will not affect Cornish's market) offers to buy 3,000 units at $17.00 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $500 and selling and administrative costs by $1,000. If Cornish accepts the offer, its profits will: A.Decrease by $4,500. B.Increase by $4,500. C.Decrease by $300. D.Increase by $13,500. E.Increase by $15,000.

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

Q: Walters manufactures a specialty food product that can currently be sold for $22 per unit and has 20,000 units on hand. Alternatively, it can be further processed at a cost of $12,000 and converted into 12,000 units of Deluxe and 6,000 units of Super. The selling price of Deluxe and Super are $30 and $20, respectively. The incremental net income of processing further would be: A.$40,000. B.$28,000. C.$18,000. D.$44,000. E.$12,000.

Q: Paxton Company can produce a component of its product that incurs the following costs per unit: direct materials, $10; direct labor, $14, variable overhead $3 and fixed overhead, $8. An outside supplier has offered to sell the product to Axle for $32. Compute the net incremental cost or savings of buying the component. A.$5.00 savings per unit. B.$3.00 cost per unit. C.$0 cost or savings per unit. D.$5.00 cost per unit. E.$3.00 savings per unit.

Q: Which of the following is true regarding the concept of flexibility? A) It is the ability to change production rates with little penalty in time, cost, or customer value. B) It can be accomplished with sophisticated electronic equipment. C) It may involve modular, movable, even cheap equipment. D) All of the above are true. E) None of the above is true.

Q: The four R's of sustainability do not include A) recycling B) resources C) regulations D) reputation E) responsibility

Q: Wheeler Company can produce a product that incurs the following costs per unit: direct materials, $10; direct labor, $24, and overhead, $16. An outside supplier has offered to sell the product to Axle for $45. If Wheeler buys from the supplier, it will still incur 45% of its overhead cost. Compute the net incremental cost or savings of buying. A.$4.00 savings per unit. B.$4.00 cost per unit. C.$2.20 cost per unit. D.$3.80 cost per unit. E.$2.20 savings per unit.

Q: Which of the following statements regarding ethical and environmentally friendly processes is true? A) Operations managers can be environmentally sensitive, but they must avoid following a low cost strategy. B) Processes can be environmentally friendly or socially responsible, but not both. C) Operations managers can be environmentally sensitive and still follow a low cost strategy. D) Using energy-efficient lighting saves so little that it should not be labeled environmentally friendly. E) The only business strategy consistent with ethical and environmentally sensitive management is the differentiation strategy.

Q: Markson Company had the following results of operations for the past year: Sales (8,000 units at $20)"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $160,000 Variable manufacturing costs"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $86,000 Fixed manufacturing costs"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 15,000 Variable selling and administrative expenses"u00a6"u00a6. 12,000 Fixed selling and administrative expenses "u00a6"u00a6"u00a6. 20,000 (133,000) Operating income"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $ 27,000 A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $14 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,600 for the purchase of special tools. If Markson accepts this additional business, its profits will: A.Increase by $3,500. B.Decrease by $5,650. C.Decrease by $1,600. D.Increase by $ 1,900. E.Decrease by $5,100.

Q: A pizza delivery company wants to improve its response time to gain a competitive advantage. Create a flowchart with 8 unique events from the time the customer calls in to the time the pizza is delivered.

Q: Lattimer Company had the following results of operations for the past year: Sales (15,000 units at $12) $180,000 Variable manufacturing costs $97,500 Fixed manufacturing costs 21,000 Selling and administrative expenses (all fixed) 36,000 (154,500) Operating income $ 25,500 A foreign company whose sales will not affect Lattimer's market offers to buy 5,000 units at $7.50 per unit. In addition to existing costs, selling these units would add a $0.25 selling cost for export fees. If Lattimer accepts this additional business, the special order will yield a: A.$2,000 loss. B.$8,250 loss. C.$3,750 profit. D.$3,250 loss. E.$5,000 profit.

Q: Construct a cause and effect chart for a missed field goal late in a football game with at least three aspects for each M.

Q: Benjamin Company had the following results of operations for the past year: Sales (16,000 units at $10) $160,000 Direct materials and direct labor $96,000 Overhead (20% variable) 16,000 Selling and administrative expenses (all fixed) 32,000 (144,000) Operating income $ 16,000 A foreign company (whose sales will not affect Benjamin's market) offers to buy 4,000 units at $7.50 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $600 and selling and administrative costs by $300. If Benjamin accepts the offer, its profits will: A.Increase by $30,000. B.Increase by $ 6,000. C.Decrease by $ 6,000. D.Increase by $ 5,200. E.Increase by $ 4,300.

Q: Create a Pareto Chart for the following mistakes made in grading an exam. Cause Frequency Incorrect Sum 35 Question marked wrong was right 3 Question marked right was wrong 4 Partial Credit not consistent 58

Q: Ahngram Corp. has 1,000 defective units of a product that cost $3 per unit in direct costs and $6.50 per unit in indirect cost when produced last year. The units can be sold as scrap for $4 per unit or reworked at an additional cost of $2.50 and sold at full price of $12. The incremental net income (loss) from the choice of reworking the units would be: A.$5,500. B.$0. C.($2,500). D.$10,500. E.$2,500.

Q: A professor teaches two sections of a class, one on MWF for 50 minutes per day and another on T/TH for 75 minutes per day. Use the following information to construct a scatter diagram with test # on the x-axis and score on the y-axis. Should the professor argue for a change in the university's scheduling? MWF Section Test Results Test # T/Th Test Results 75 1 82 70 2 77 65 3 73 65 4 70 70 5 76

Q: Construct a cause and effect diagram for why students arrive to class late. Include at least three reasons for each of the M's.

Q: A refrigeration and heating companyone that installs and repairs home central air and heating systemshas asked your advice on how to analyze their service quality. They have logged customer complaints. Here's a recent sampling. Use the supplied template to construct a conventional cause-and-effect diagram. Place each of the complaints onto a main cause; justify your choice with a brief comment as necessary. 1. "I was overchargedyour labor rates are too high." 2. "The repairman left trash where he was working." 3. "You weren't here when you said you would be. You should call when you must be late." 4. "Your repairman smoked in my house."5. "The part you installed is not as good as the factory original." 6. "Your repairman was here for over two hours, but he wasn't taking his work seriously."7. "You didn't tighten some of the fittings properlythe system's leaking." 8. "Your estimate of repair costs was WAY off." 9. "I called you to do an annual inspection, but you've done morework that I didn't authorize."10. "Your mechanic is just changing partshe doesn't have a clue what's really wrong." 11. "Your bill has only a totalI wanted to see detail billing." 12. "Your testing equipment isn't very neware you sure you've diagnosed the problem?"13. "One of the workmen tracked mud into my living room."

Q: Frederick Co. is thinking about having one of its products manufactured by a subcontractor. Currently, the cost of manufacturing 5,000 units follows: Direct material $62,000 Direct labor 47,000 Variable factory overhead"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 38,000 Factory overhead 52,000 If Frederick can buy 5,000 units from a subcontractor for $130,000, it should: A.Make the product because current factory overhead is less than $130,000. B.Make the product because the cost of direct material plus direct labor of manufacturing is less than $130,000. C.Make the product because factory overhead is a sunk cost. D.Buy the product because total fixed and variable manufacturing costs are greater than $130,000. E.Buy the product because the total incremental costs of manufacturing are greater than $130,000.

Q: Pretend that you have just come from a relative's wedding reception. It didn't turn out as well as it should have, and the bride's parents are pretty mad at how things turned out. Use the supplied template to construct a conventional cause-and-effect diagram. Identify twelve sources of defects for the issue "dissatisfied customer of wedding reception caterer." (Your dozen need not be exactly three per main cause, but should be a balanced treatment.) Categorize each cause onto a main cause. Provide brief support for each of your choices.

Q: Bannister Co. is thinking about having one of its products manufactured by a subcontractor. Currently, the cost of manufacturing 1,000 units follows: Direct material $45,000 Direct labor 30,000 Factory overhead (30% is variable) 98,000 If Bannister can buy 1,000 units from a subcontractor for $100,000, it should: A.Make the product because current factory overhead is less than $100,000. B.Make the product because the cost of direct material plus direct labor of manufacturing is less than $100,000. C.Buy the product because the total incremental costs of manufacturing are greater than $100,000. D.Buy the product because total fixed and variable manufacturing costs are greater than $100,000. E.Make the product because factory overhead is a sunk cost.

Q: Construct a cause-and-effect diagram showing why a student might be dissatisfied with the cafeteria.

Q: Perform a Pareto analysis on the following information: Reason for unsatisfying check-out at store Frequency Unfriendly cashier 27 Incorrect change 4 Cashier too slow 9 Price check 34 Poorly bagged merchandise 2 Slow receiving check approval 3

Q: Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Bluebird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. Production costs for these units are $3.50 per unit, which includes $2.25 variable cost and $1.25 fixed cost. If Bluebird accepts this additional business, the effect on net income will be: A.$45,000 increase. B.$11,250 increase. C.$33,750 increase. D.$7,500 decrease. E.$33,750 decrease.

Q: Perform a Pareto analysis on the following information: Reason for unsatisfying stay at hotel Frequency Unfriendly staff 6 Room not clean 2 Room not ready at check-in 3 No towels at pool 33 No blanket for pull-out sofa 4 Pool water too cold 3 Breakfast of poor quality 16 Elevator too slow or not working 23 Took too long to register 7 Bill incorrect 3 Total 100

Q: Minor Electric has received a special one-time order for 1,500 light fixtures (units) at $5 per unit. Minor currently produces and sells 7,500 units at $6.00 each. This level represents 75% of its capacity. Production costs for these units are $4.50 per unit, which includes $3.00 variable cost and $1.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1,000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $1,250 on the special order, the size of the order would need to be: A.4,500 units. B.2,250 units. C.1,125 units. D.625 units. E.300 units.

Q: Management is concerned that workers create more product defects at the very beginning and end of a work shift than at other times of their eight hour workday. Construct a scatter diagram with the following data, collected last week. Is management justified in its belief? Number of Defects Monday Tuesday Wednesday Thursday Friday First hour at work 12 9 6 8 7 Second hour at work 6 5 3 4 5 Third hour at work 5 2 4 3 3 Fourth hour at work 4 0 5 2 3 Fifth hour at work 1 6 2 4 5 Sixth hour at work 4 3 3 2 1 Seventh hour at work 7 4 4 6 3 Eighth hour at work 5 7 8 5 9

Q: Identify the ten determinants of service quality. Describe two of them in a sentence or two each.

Q: Maxim manufactures a cat food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $1.80 and total fixed costs are $10,000. The cat food can be sold as it is for $9.00 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,000 cost. The additional processing will yield 10,000 bags of Premium Green and 3,000 bags of Green Deluxe, which can be sold for $8 and $6 per bag, respectively. If Green Health is processed further into Premium Green and Green Deluxe, the total gross profit would be: A.$ 68,000. B.$ 78,000. C.$ 96,000. D.$ 98,000. E.$100,000.

Q: What is a poka-yoke? Give an example.

Q: How is source inspection related to employee empowerment?

Q: Maxim manufactures a hamster food product called Green Health. Maxim currently has 10,000 bags of Green Health on hand. The variable production costs per bag are $1.80 and total fixed costs are $10,000. The hamster food can be sold as it is for $9.00 per bag or be processed further into Premium Green and Green Deluxe at an additional $2,000 cost. The additional processing will yield 10,000 bags of Premium Green and 3,000 bags of Green Deluxe, which can be sold for $8 and $6 per bag, respectively. The net advantage (incremental income) of processing Green Health further into Premium Green and Green Deluxe would be: A.$98,000. B.$96,000. C.$ 8,000. D.$ 6,000. E.$ 2,000.

Q: Listmann Corp. processes four different products that can either be sold as is or processed further. Listed below are sales and additional cost data: Sales Sales Value Additional Value after with no further Processing further Product Processing Costs processing Premier $1,350 $900 $2,700 Deluxe 450 225 630 Super 900 450 1,800 Basic 90 90 45 180 Which product(s) should not be processed further? A.Premier. B.Deluxe. C.Super. D.Basic. E.Premier and Basic.

Q: Explain how a Pareto chart can identify the most important causes of errors in a process.

Q: What is the quality loss function (QLF)?

Q: Factor Co. can produce a unit of product for the following costs: Direct material $ 8 Direct labor 24 Overhead 40 Total costs per unit $72 An outside supplier offers to provide Factor with all the units it needs at $46 per unit. If Factor buys from the supplier, the company will still incur 60% of its overhead. Factor should choose to: A.Buy since the relevant cost to make it is $56. B.Make since the relevant cost to make it is $48. C.Buy since the relevant cost to make it is $48. D.Make since the relevant cost to make it is $32. E.Buy since the relevant cost to make it is $32.

Q: Epsilon Co. can produce a unit of product for the following costs: Direct material $ 8 Direct labor 24 Overhead 40 Total costs per unit $72 An outside supplier offers to provide Epsilon with all the units it needs at $60 per unit. If Epsilon buys from the supplier, the company will still incur 40% of its overhead. Epsilon should choose to: A.Buy since the relevant cost to make it is $72. B.Make since the relevant cost to make it is $56. C.Buy since the relevant cost to make it is $48. D.Make since the relevant cost to make it is $48. E.Buy since the relevant cost to make it is $56.

Q: Identify the major concepts of TQM.

Q: What is the difference between conforming quality and target-oriented quality?

Q: Chang Industries has 2,000 defective units of product that have already cost $14 each to produce. A salvage company will purchase the defective units as they are for $5 each. Chang's production manager reports that the defects can be corrected for $6 per unit, enabling them to be sold at their regular market price of $21. The incremental income or loss on reworking the units is: A.$20,000 loss. B.$20,000 income. C.$12,000 loss. D.$32,000 income. E.$30,000 income.

Q: Explain how just-in-time processes relate to the quality of an organization's outputs.

Q: What steps can be taken to develop benchmarks?

Q: Gordon Corporation inadvertently produced 10,000 defective digital watches. The watches cost $8 each to produce. A salvage company will purchase the defective units as they are for $3 each. Gordon's production manager reports that the defects can be corrected for $5 per unit, enabling them to be sold at their regular market price of $12.50. Gordon should: A.Sell the watches for $3 per unit. B.Correct the defects and sell the watches at the regular price. C.Sell the watches as they are because repairing them will cause their total cost to exceed their selling price. D.Sell 5,000 watches to the salvage company and repair the remainder. E.Throw the watches away.

Q: Describe how ISO 9000 has evolved in the past several years.

Q: Identify the five core elements of ISO 14000.

Q: In a sentence or two, summarize the contribution of Philip Crosby to quality management.

Q: An additional cost incurred only if a company pursues a particular course of action is a(n): A.Period cost. B.Pocket cost. C.Discount cost. D.Incremental cost. E.Sunk cost.

Q: Quality has at least three categories of definitions; identify them. Provide a brief explanation of each.

Q: State the American Society for Quality's definition of quality. Of the three "flavors" or categories of quality definitions, which type is it? Explain.

Q: A cost that requires a future outlay of cash, and is relevant for current and future decision making, is a(n): A.Out-of-pocket cost. B.Sunk cost. C.Opportunity cost. D.Operating cost. E.Uncontrollable cost.

Q: Identify the four costs of quality. Which one is hardest to evaluate? Explain.

Q: The potential benefits lost by taking a specific action when two or more alternative choices are available is known as a(n): A.Alternative cost. B.Sunk cost. C.Out-of-pocket cost. D.Differential cost. E.Opportunity cost.

Q: __________ is doing the job properly with the operator ensuring that this is so.

Q: __________ are graphical presentations of data over time that show upper and lower control limits for processes we want to control.

Q: An opportunity cost: A.Is an unavoidable cost because it remains the same regardless of the alternative chosen. B.Requires a current outlay of cash. C.Results from past managerial decisions. D.Is the potential benefit lost by choosing a specific alternative course of action among two or more. E.Is irrelevant in decision making because it occurred in the past.

Q: __________ diagrams use a schematic technique to discover possible locations of quality problems.

Q: To maximize profit when a constrained resource exists, management should produce the sales mix that has the highest contribution margin per unit of scarce resource.

Q: A group of employees that meet on a regular basis with a facilitator to solve work-related problems in their work area is a(n) __________.

Q: Sales mix refers to the combination of products sold by a company.

Q: __________ selects a demonstrated standard of performance that represents the very best performance for a process or activity.

Q: Respect for __________ is a cornerstone of continuous improvement.

Q: Employee morale, timeliness of delivery, and the reactions of customers are examples of nonfinancial factors that should be considered when making a managerial decision.

Q: Enlarging employee jobs so that the added responsibility and authority is moved to the lowest level possible in the organization is called __________.

Q: Additional power for operating machines, extra supplies, and added cleanup costs are examples of incremental overhead costs.

Q: __________ is the Japanese word for the ongoing process of incremental improvement.

Q: Contribution margin lost from a decline in sales is an opportunity cost.

Q: Not only customers, but stockholders, suppliers, and others, are among the __________ whose values must be protected in making ethical decisions concerning the quality of products.

Q: If accepting additional business would cause existing sales to decline, the offer should always be declined.

Q: The work by __________ regarding how people learn from each other's successes led to the field of cross-functional teamwork.

Q: Additional costs incurred if a company pursues a certain course of action are sunk costs.

Q: __________ is a set of environmental standards developed by the International Standards Organization.

Q: Incremental costs are also called out-of-pocket costs.

Q: __________ costs result from production of defective parts or services before delivery to the customer.

Q: A markup percentage equals total costs divided by desired profit.

Q: Arnold Palmer Hospital uses __________ to seek new ways to reduce readmission rates.

Q: Which of the determinants of service quality involves performing the service right the first time? A) access B) courtesy C) credibility D) reliability E) responsiveness

Q: The total cost method determines a selling price equal to a product's total costs plus a desired profit on the product.

Q: Which of the determinants of service quality involves having the customer's best interests at heart? A) access B) courtesy C) credibility D) responsiveness E) tangibles