Q&A Hero

Q: An example of a controllable cost is equipment depreciation expense.

Q: In the __________ phase of the product life cycle, the product design has begun to stabilize.

Q: A department's direct expenses are usually considered uncontrollable costs.

Q: Regal Marine's use of __________ has reduced product development time and reduced problems with tooling and production.

Q: No standard rule identifies the best basis of allocating expenses across departments, so it is impossible to allocate costs in a manner that will be perceived as fair.

Q: Payoffs, alternatives, and expected monetary values are terms associated with A) virtual reality B) Product Lifecycle Management C) Quality Function Deployment D) decision trees E) make-or-buy analysis

Q: The role of decision trees in product design is A) to rank products in descending order of their dollar contribution to the firm B) to better understand the customers' wants C) to calculate the expected value of each course of action D) to calculate the value of quality function deployment E) to calculate the value of the moment of truth

Q: Which of the following scenarios illustrates a moment that meets the customer's expectations? A) a sales clerk that called you by your name on your second visit to the store B) an express mail service that guarantees same day delivery C) a flight attendant that responds shortly after being called D) a professor that contacts people in several companies to find you a job E) a sales clerk at the clothing store that asked you to wait for a minute as soon as a wealthy-looking customer entered the store

Q: Which of the following scenarios illustrates a moment that exceeds the customer's expectations? A) an express mail service that guarantees overnight delivery B) a flight attendant that responds shortly after being called C) a hairdresser that cuts your hair at the right length D) a professor that contacts people in several companies to find you a job E) a bank that sends you monthly account statements

Q: The concepts of direct expenses and controllable costs are essentially the same; also, indirect expenses and uncontrollable costs are essentially the same.

Q: Which service design technique(s) would ordinarily not be appropriate for full-service restaurant meals? A) modularizing the product B) customization as late in the process as possible C) reducing customer interaction D) the moment of truth E) All of the above are appropriate.

Q: Departmental salary expenses are direct expenses of that department.

Q: For a full-time college student, which of the following moments of truth exemplifies the customer's standard expectations? A) Your advisor made you wait, even though you had an appointment. B) You had to visit more than once to reach your academic advisor. C) Your advisor was competent, helpful, and understanding. D) Your advisor failed to keep her appointment with you. E) Your advisor offered to work with you after regular work hours.

Q: Direct expenses require allocation across departments because they cannot be readily traced to one department.

Q: Modern ATM machines are an automated example of a service design that A) reduces customer interaction B) modularizes the service C) delays service customization D) has no moment of truth E) has insufficient quality function deployment

Q: Indirect expenses are allocated to departments based upon the benefits received by each department.

Q: Which of the following examples involves customer participation in the design of the service? A) investing in a mutual fund B) getting a chest x-ray at the hospital C) providing the stockbroker with the desired distribution of the portfolio D) seeing a movie at the theater E) eating at a fast-food restaurant

Q: A profit center generates revenue, incurs costs, and has the authority to make significant investing decisions.

Q: Which of the following is not a service design technique used to reduce cost? A) increasing customer interaction B) delaying customization C) automation D) modularizing the product E) reducing customer interaction

Q: The document for production that gives the instruction to make a given quantity of a particular item, usually to a given schedule, is A) the work order B) the route sheet C) the bill of information D) the assembly chart E) the value analysis

Q: A restaurant kitchen contains a wall poster that shows, for each sandwich on the menu, a sketch of the ingredients and how they are arranged to make the sandwich. This is an example of a(n) A) assembly drawing B) route sheet C) bill of material D) work order E) virtual technology

Q: Which of the following documents lists the operations (including assembly and inspection) necessary to produce the component with the material specified in the bill of material? A) an engineering drawing B) an assembly drawing C) a route sheet D) an assembly chart E) an operations chart

Q: A process sheet is a type of A) assembly drawing B) assembly chart C) route sheet D) work order E) bill of material

Q: An assembly chart A) shows graphically how the product is assembled B) shows an exploded view of the product C) lists the operations, including assembly and inspection, necessary to produce the component with the material specified in the bill of material D) provides detailed instructions on how to perform a given task E) describes the dimensions and finish of each component

Q: Departmental information is usually distributed to the public as part of the company's annual report and footnotes.

Q: An assembly drawing A) shows, in schematic form, how the product is assembled B) shows an exploded view of the product C) lists the operations, including assembly and inspection, necessary to produce the component with the material specified in the bill of material D) provides detailed instructions on how to perform a given task E) describes the dimensions and finish of each component

Q: Profit center managers are evaluated on their ability to generate revenues in excess of costs.

Q: Group technology requires that A) each component be identified by a coding scheme that specifies the type of processing and the parameters of the processing B) a specific series of engineering drawings be prepared C) all bills of material be prepared using the same format D) engineering change notices be linked to each of the bills of material and engineering notices E) the final products be standardized

Q: Evaluation of the performance of an investment center involves only financial measures.

Q: A route sheet provides a(n) A) exploded view of the product B) instruction to make a given quantity of a particular item C) schematic showing how the product is assembled D) sequence of operations necessary to produce the component E) set of detailed instructions about how to perform a task

Q: The components, their description, and the quantity of each required to make one unit of a product are documented on A) a group technology listing B) a route sheet C) a bill of material D) an engineering drawing E) none of the above

Q: Which of the following shows in schematic form how a product is assembled? A) an engineering drawing B) an assembly routing C) an assembly chart D) a route sheet E) a process sheet

Q: Which of the following typically shows the components, their description, and the quantity of each required to make one unit of a product? A) an engineering drawing B) an assembly drawing C) a bill of material D) an assembly chart E) a route sheet

Q: Which of the following does not result from the effective use of group technology? A) reduced tooling setup time B) better electronic communication between team members C) reduced raw materials and purchases D) simplified production planning and control E) improved layout, routing, and machine loading

Q: The investment center return on investment is ________________ divided by ________.

Q: The dimensions, tolerances, materials, and finishes of a component are typically shown on a(n) A) assembly chart B) engineering drawing C) bill of material D) assembly drawing E) route sheet

Q: A(n) _______________________ is a department that generates revenues and incurs costs and whose manager is also responsible for using the center's assets to generate income for the center.

Q: ___________________ are costs incurred to produce or purchase two or more products at the same time.

Q: An engineering drawing shows the A) dimensions, tolerances, materials, and finishes of a component B) dimensions, tolerances, cost, and sales or use volume of a component C) materials, finishes, machining operations, and dimensions of a component D) cost, materials, tolerances, and lead-time for a component E) cost, dimensions, and machining operations for a component

Q: Which of the following product development strategies has the highest risk? A) acquiring the developer B) alliances C) joint ventures D) new internally developed products E) purchasing technology

Q: Which of the following is an example of an external product development strategy? A) new internally developed products B) enhancements to existing products C) alliances D) migrations of existing products E) All of the above are examples of internal product development strategy.

Q: Jarrett Department Store operates three departments (A, B and C). If total costs of $4,500 are to be allocated on the basis of square feet of space (Dept. A = 1,500 Sq. Ft.; Dept. B = 900 Sq. Ft.; Dept. C = 600 Sq. Ft.) then Dept. A's share (in percent) of the $4,500 cost would be ________%; Dept. B would be ______%, and Dept. C would be __________%. The amount of cost allocated to Dept. C would be $__________.

Q: The change in cell-phone model life cycles from 2 years to under 6 months is the result of A) time-based competition B) design for manufacturability C) life cycle assessment D) value analysis E) all of the above

Q: An operations manager's ethical responsibilities A) are limited to the production phase of product life cycle B) are limited to following published laws and regulations C) extend from design, to production, to final destruction/disposition of a product D) do not include being efficient with the firm's resources E) need not consider a product design's impact on the entire economy

Q: Products are more "environmentally friendly" when they are made A) using cheaper materials B) using less energy C) according to OSHA standards D) where environmental regulations are lax E) more difficult to disassemble

Q: One method used to determine a product's total environmental impact from conversion of inputs through production and to disposal is A) QFD B) Design for manufacturability C) Environmental Scanning D) Life Cycle Assessment E) CAD

Q: Which of the following makes products that are friendlier to the environment? A) using less materials B) more recycled materials C) using less energy D) using less harmful ingredients E) all of the above

Q: A _______________________ generates revenues and incurs costs.

Q: Value analysis takes place A) when the product is selected and designed B) during the initial stages of production when something needs to be done to assure product success C) when the product is first conceived D) during the production process when it is clear the new product is a success E) when the product cost is very low

Q: Bridget's Hamburger Stand uses only 7 ingredients but offers 15 different burgers. This process is known as A) Robust Design B) QFD C) Modular Design D) CAD E) Value analysis

Q: When constructing a House of Quality, what value is assigned to a Medium relationship between the things that we can do? A) 3 B) 2 C) 50 D) 5 E) 10

Q: Boiano Corp. operates a retail store and has two service departments and two operating departments, Hardware and Automotive. During the current year, the departments had the following direct expenses and occupied the following amount of floor space. Department Direct Expenses Square Feet Advertising $50,000 750 Administrative 100,000 1,500 Hardware 150,000 3,000 Automotive 200,000 9,750 The advertising department developed and aired 150 spots. Of these spots, 60 spots were for Hardware and 90 spots were for Automotive. The store sold $1,500,000 of merchandise during the year; $675,000 in Hardware and $825,000 in Automotive. Indirect expenses include rent, utilities, and insurance expense. Total indirect expenses of $220,000 are allocated to all departments. Prepare a departmental expense allocation spreadsheet for Boiano. The spreadsheet should assign (1) direct expenses to each of the four departments, (2) allocate the indirect expenses to each department on the basis of floor space occupied, (3) the advertising department's expenses to the two operating departments on the basis of ad spots placed promoting each department's products, (4) the administrative department's expenses based on the amount of sales. Complete the departmental expense allocation spreadsheet below. Provide supporting computations for the expense allocations below the spreadsheet. Boiano Corp. Departmental Expense Allocations For Year Ended December 31 Advertising Administrative Hardware Automotive Direct Expenses Direct expenses Indirect expenses Indirect expenses

Q: Black & Decker's hand-powered tools and Hewlett-Packard's printer business are examples of using enhancements and migrations of existing products to build on a __________. A) product template B) product pulpit C) product platform D) product dais E) product foundation

Q: Franklin Co. has three departments: purchasing, human resources, and assembly. In a recent month the three departments incurred two shared indirect expenses. The amounts of the indirect expenses and the bases used to allocate them follow. Use this information to allocate each of the two indirect expenses across the three departments using the tables provided below. Indirect Expense Cost Allocation Base Supervision $85,000 Number of employees Utilities and Insurance 38,000 Square feet occupied Total 123,000 Departmental data for the company's recent reporting period follow. Department Employees Square Feet Purchasing 10 15,000 Human Resources 6 10,000 Assembly 20 25,000 Total 36 50,000 Supervision Purchasing Human Resources Assembly Total Utilities and Insurance Purchasing Human Resources Assembly Total

Q: A manufacturing plant uses a computerized scanner to measure the inner diameters of the belts it produces to ensure they are within the specifications. This is referred to as A) CAM B) CAD C) QFD D) DFMA E) STEP

Q: Marsha Hansen, the manager of the Flint Plant of the Michigan Company is responsible for all of the plant's costs except her own salary. There are two operating departments within the plant, Departments A and B. Each department has its own manager. There is also a maintenance department that provides services equally to the two operating departments. The following information is available. A Budget B Total A Actual B Total Employee wages $3,500 $4,000 $7,500 $3,200 $4,700 $7,900 Department Manager's salary 800 800 1,600 800 800 1,600 Supplies 750 600 1,350 700 590 1,290 Building rent 1,500 1,500 3,000 1,400 1,400 2,800 Utilities 300 300 600 375 375 750 Maintenance 3,300 3,300 6,600 3,000 3,000 6,000 Totals $10,150 $10,500 $20,650 $9,475 $10,865 $20,340 Department managers are responsible for the wages and supplies in their department. They are not responsible for their own salary. Building rent, utilities, and maintenance are allocated to each department based on square footage. Required: Complete the responsibility accounting performance reports below that list costs controllable by the manager of Department A, the manager of Department B, and the manager of the Flint plant. Budgeted amount Actual amount Over (under) budget Manager, Flint Plant Controllable costs: Manager, Department A Controllable costs: Manager, Department B Controllable Costs:

Q: Which of the following is true concerning CAD? A) Accurate information flows to other departments. B) Most product costs are determined at the design stage. C) Design options are easier to review before final commitments are made. D) Virtually all products have their development cycle shortened. E) All of the above are true.

Q: The Linens Department of the Krafton Department Store had sales of $282,000, cost of goods sold of $173,500, indirect expenses of $19,875, and direct expenses of $41,250 for the current period. What is the Linens Department's contribution to overhead as a percent of sales?

Q: Which of the following is true regarding computer-aided design? A) It is too expensive to use in most manufacturing and design settings. B) It is an old technology C) It results in longer development cycles for virtually all products. D) It is the use of computers to interactively design products and prepare engineering documentation. E) All of the above are true.

Q: Manufacturability and Value Engineering has which of the following benefits? I. Reduced complexity of the product II. Reduction of environmental impact III. Additional standardization of components IV. Robust design V. Improved job design and safety A) I, III, V B) II, IV C) I, III, IV D) IV E) I, II, III, IV, V

Q: The following data is available for the Janitorial Services Department of Glitterol Co. Revenues $216,000 Cost of Sales 168,000 Expenses: Supplies-Direct 12,000 Salaries-Indirect Allocated 34,000 Rent-Direct 8,000 Rent-Indirect Allocated 4,500 Required: Calculate departmental contribution to overhead for the Janitorial Services Department, including the department's contribution as a percentage of revenues.

Q: The Japanese method of organizing for product design features A) teams B) product managers (champions) C) distinct departments with assigned tasks D) a single organization without subdivision or individual teams E) none of the above

Q: Williams Co. operates three separate departments (R, S, T). The data below is provided for the current year: Total Sales"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6... $120,000 ($40,000 from each department) Cost of Goods Sold"u00a6"u00a6"u00a6"u00a6. $ 80,000 (50% from R; 25% from S; 25% from T) Direct Expense"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $ 26,000 ($6,000 from R; $12,000 from S; $8,000 from T) Indirect Expenses"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $ 9,000 Required: Prepare an income statement showing the departmental contributions to overhead for the current year.

Q: When developing the Trident Splash, Cadbury faced design problems overcome by A) manufacturability and value engineering B) QFD C) the House of Quality D) CAD E) decision trees

Q: Holliday, Inc., operates a retail store with two departments, A and B. Its departmental income statement for the current year follows: Holliday, Inc. Departmental Income Statement For Year Ended December 31 Dept. A Dept. B Combined Sales $180,000 $200,000 $380,000 Direct expenses 129,900 142,870 272,770 Contributions to overhead $ 50,100 $ 57,130 $107,230 Indirect expenses: Depreciation--Building 10,000 11,760 21,760 Maintenance 1,600 1,700 3,300 Utilities 6,200 6,320 12,520 Office expenses 1,800 2,000 3,800 Total indirect expenses $ 19,600 $ 21,780 $ 41,380 Net income $ 30,500 $ 35,350 $ 65,850 Holliday allocates building depreciation, maintenance, and utilities on the basis of square footage. Office expenses are allocated on the basis of sales. Management is considering an expansion to a three-department operation. The proposed Department C would generate $120,000 in additional sales and have a 17.5% contribution to overhead. The company owns its building. Opening Department C would redistribute the square footage to each department as follows: A, 19,040; B, 21,760 sq. ft.; C, 13,600. Increases in indirect expenses would include: maintenance, $500; utilities, $3,800; and office expenses, $1,200. Complete the following departmental income statements, showing projected results of operations for the three sales departments. (Round amounts to the nearest whole dollar.) Dept. A Dept. B Dept. C Combined Sales......................................................................... $180,000 $200,000 Direct expenses....................................................... 129,900 142,870 Contributions to overhead...................................... $ 50,100 $ 57,130 Indirect expenses...................................................... Depreciationbuilding...................................... Maintenance....................................................... Utilities.............................................................. Office expenses.................................................. Total indirect expenses...................................... Net income...............................................................

Q: The use of product development teams in design and engineering activities is also known as A) the Japanese approach B) concurrent engineering C) QFD D) the traditional U.S. approach E) none of the above

Q: Nesbit Co. has two operating (production) departments supported by a number of service departments. The following information was collected for a recent period: Direct Costs Indirect Cost Machining Department Assembly Department Salaries $122,400 $ 85,700 $36,700 Insurance 20,200 11,000 5,500 Utilities 23,900 13,900 2,000 Depreciation 20,700 11,500 13,800 Maintenance 7,000 4,700 29,400 Office expenses -0- -0- 71,100 Cost of goods sold 327,600 121,200 Indirect costs are allocated as follows: salaries on the basis of sales, office expenses on the basis of the number of employees, and all other costs on the basis of square footage. Additional information about the production departments follows: Square Number of Footage Employees Machining"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6.. 14,535 78 Assembly"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6... 4,845 52 Sales for the Machining Department are $724,404 and sales for the Assembly Department are $356,796. Determine the departmental contribution to overhead and the departmental net income for each production department.

Q: Sturdivant Fasteners, Co. uses a traditional allocation of overhead based on direct labor hours system. The manager has accumulated the following information on engineering changes, which are indirect cost of their products, for two of the company's major products: Automotive Fasteners Computer Fasteners Total units produced 5,000 2,500 Cost per engineering change $400 $ 400 Number of engineering changes 5 25 Direct labor hours per unit 4 4 Compute the cost per unit using: The traditional two-stage allocation of the costs of engineering changes based on direct labor hours.

Q: One result of concurrent engineering in product design is A) speedier product development B) lower quality C) less customer demand D) higher costs E) all of the above

Q: A graphic technique for defining the relationship between customer desires and product/service is A) Product Lifecycle Management B) the House of Quality C) the moment of truth D) the assembly drawing E) the product development team

Q: Chancellor Company is divided into four departments. Departments A and B are service departments and Departments 1 and 2 are operating (production) departments. The services of the two service departments are used by the other departments as follows: Dept. A Dept. B Dept. 1 Dept. 2 Services of: Department A............ 50% 20% 30% Department B............ 40% 60% Direct costs incurred by each department $60,000 $50,000 $70,000 $80,000 Complete the following table: Allocation of Expenses to Departments Department A Department B Department 1 Department 2 Total direct Department expenses.. $60,000 $50,000 $ 70,000 $ 80,000 Service department expenses Department A............ Subtotal........................ Department B............ Total.............................

Q: Quality function deployment (QFD) A) determines what will satisfy the customer B) translates customer desires into the target design C) is used early in the design process D) is used to determine where to deploy quality efforts E) all of the above

Q: Arkansas Toys, a retail store, has three sales departments supported by two service departments. Cost and operational data for each department follow: Purch. Sales Cost of Square Orders Department Sales Goods Sold Footage Issued 1 $92,160 $36,864 1,728 1,260 2 69,120 32,832 3,024 1,680 3 80,640 32,256 1,296 2,310 Service Departments Allocation Basis Cost Advertising"u00a6"u00a6"u00a6.. Sales $10,000 Purchasing"u00a6"u00a6"u00a6... No. of purchase orders issued 12,000 Determine the service department expenses to be allocated to Sales Department 1 for (round answers to whole dollars): Advertising ___________________ Purchasing ___________________

Q: Reducing the complexity of a product and improving a product's maintainability for use are activities of A) Product Lifecycle Management (PLM) B) product-by-value-analysis C) manufacturability and value engineering D) organizing for product development E) design for destruction (DFD)

Q: City Park College allocates administrative costs to its teaching departments based on the number of students enrolled, while maintenance and utilities are allocated based on square feet of classrooms. Based on the information below, what is the total amount of expenses allocated to each department (rounded to the nearest dollar) if administrative costs for the college were $180,000, maintenance expenses were $70,000, and utilities were $85,000? Teaching Size of Department Students Classroom Electronics"u00a6"u00a6"u00a6"u00a6"u00a6. 117 900 sq. ft. Automotive"u00a6"u00a6"u00a6"u00a6... 156 750 sq. ft. Computers"u00a6"u00a6"u00a6"u00a6.... 429 1,200 sq. ft. Plumbing"u00a6"u00a6"u00a6"u00a6"u00a6.. 78 150 sq. ft.

Q: Which of the following is true regarding value engineering? A) Value engineering occurs only after the product is selected and designed. B) Value engineering is the same as value analysis. C) Value engineering is oriented toward improvement of design. D) Value engineering occurs during production when it is clear the product is a success. E) Value engineering can save substantial amounts of product cost, but quality suffers.

Q: Use the Hamilton Company's investment center information below to calculate (a) return on total investment and (b) investment center residual income. Net Income"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $315,900 Average Invested Assets"u00a6"u00a6.. $2,100,000 Target Net Income"u00a6"u00a6"u00a6"u00a6"u00a6 6% of division assets

Q: What % of sales from new products is indicative of industry leaders? A) 50% B) below 25% C) 25 to 35% D) above 60% E) 35 to 45%

Q: Karl and Grady are managers of two product lines for Brewster Company. One of them is a candidate for promotion based on performance. Using the data below, determine who had the better performance using performance measures such as net income, profit margin, and return on investment. Show your calculations and support your answer. Karl Grady Revenue.................... $412,000 $450,000 Costs........................ 380,000 411,000 Average Assets......... 400,000 600,000

Q: Which of the following represents an opportunity for generating a new product? A) understanding the customer B) demographic change, such as decreasing family size C) changes in professional standards D) economic change, such as rising household incomes E) All of the above are such opportunities.