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Q: Wrap-It Company, a manufacturer of wrapping paper, began operations on June 1 of the current year. During this time, the company produced 370,000 units and sold 310,000 units at a sales price of $50 per unit. Cost information for this period is shown in the following table: Production costs Direct materials $2.00 per unit Direct labor $.80 per unit Variable overhead $814,000 in total Fixed overhead $481,000 in total Non production costs Variable selling and administrative $78,000 in total Fixed selling and administrative $210,000 in total a. Prepare Wrap-It's December 31st income statement for the current year under absorption costing. b. Prepare Wrap-It's December 31st income statement for the current year under variable costing. a. WRAP-IT COMPANYIncome Statement (Absorption Costing)For the seven months ended December 31, xx Sales (310,000 $50) $15,500,000 Cost of goods sold (310,000 $6.30*) 1,953,000 Gross margin 13,547,000 Selling and administrative expenses ($78,000 + $210,000) 288,000 Net income $13,259,000 *$2 + $.80 + ($814,000/370,000) + ($481,000/370,000) = $6.30 b. WRAP-IT COMPANYIncome Statement (Variable Costing)For the seven months ended December 31, xx Sales (310,000 $50) $15,500,000 Variable expenses Variable production costs (310,000 $5.00*) 1,550,000 Variable selling and administrative 78,000 Contribution margin 13,872,000 Fixed expenses Fixed overhead 481,000 Fixed selling and administrative expenses 210,000 Net income $13,181,000 *$2 + $.80 + ($814,000/370,000) = $5.00

Q: A foundry produces circular utility access hatches (manhole covers). Currently, 120 covers are produced in a 10-hour shift. If labor productivity can be increased by 20%, it would then be A) 14.4 covers/hr B) 24 covers/hr C) 240 covers/hr D) 1200 covers/hr E) none of the above

Q: Blatt Company, a manufacturer of slippers, began operations on June 1 of the current year. During this time, the company produced 210,000 units and sold 185,000 units at a sales price of $40 per unit. Cost information for this period is shown in the following table: Production costs Direct materials $5.00 per unit Direct labor $4.75 per unit Variable overhead $302,000 in total Fixed overhead $405,000 in total Non-production costs Variable selling and administrative $9,000 in total Fixed selling and administrative $25,000 in total a. Prepare Blatt's December 31st income statement for the current year under absorption costing. b. Prepare Blatt's December 31st income statement for the current year under variable costing. a. Blatt COMPANYIncome Statement (Absorption Costing)For the seven months ended December 31, xx Sales (185,000 $40) $7,400,000 Cost of goods sold (185,000 $13.12*) 2,427,200 Gross margin 4,972,800 Selling and administrative expenses ($9,000 + $25,000) 34,000 Net income $4,938,800 *$5 + $4.75 + ($302,000/210,000) + ($405,000/210,000) = $13.12 b. Blatt COMPANYIncome Statement (Variable Costing)For the seven months ended December 31, xx Sales (185,000 $40) $7,400,000 Variable expenses Variable production costs (185,000 $11.19*) 2,070,150 Variable selling and administrative 9,000 Contribution margin 5,320,850 Fixed expenses Fixed overhead 405,000 Fixed selling and administrative expenses 25,000 Net income $4,890,850 *$5 + $4.75 + ($302,000/210,000) = $11.19

Q: Stonehenge Inc., a manufacturer of landscaping blocks, began operations on April 1 of the current year. During this time, the company produced 750,000 units and sold 720,000 units at a sales price of $9 per unit. Cost information for this period is shown in the following table: Production costs Direct materials $1.80 per unit Direct labor $.30 per unit Variable overhead $495,000 in total Fixed overhead $450,000 in total Non production costs Variable selling and administrative $18,000 in total Fixed selling and administrative $53,000 in total a. Prepare Stonehenge's December 31st income statement for the current year under absorption costing. b. Prepare Stonehenge's December 31st income statement for the current year under variable costing. a. STONEHENGE, INC. Income Statement (Absorption Costing) For the nine months ended December 31, xx

Q: A foundry produces circular utility access hatches (manhole covers). If 120 covers are produced in a 10-hour shift, the productivity of the line is A) 1.2 covers/hr B) 2 covers/hr C) 12 covers/hr D) 1200 covers/hr E) none of the above

Q: Which of the following statements about trends in operations management is false? A) Job specialization is giving way to empowered employees. B) Local or national focus is giving way to global focus. C) Environmentally-sensitive production is giving way to low-cost focus. D) Rapid product development is partly the result of shorter product cycles. E) All of the above statements are false.

Q: Cavalier Corporation sold 26,000 units of its product at a price of $225 per unit. Total variable cost per unit is $188, consisting of $103 in variable production cost and $85 in variable selling and administrative cost. Compute the manufacturing margin for the company under variable costing. ($225 - $103) 26,000 units = $3,172,000

Q: Digby Company manufactured and sold 37,000 units of its product at a price of $93 per unit. Total variable cost per unit is $60, consisting of $58 in variable production cost and $2 in variable selling and administrative cost. Fixed costs of manufacturing are $350,000. a. Compute the manufacturing margin for the company under variable costing. b. Compute the contribution margin based on this data. c. Compute the gross margin under absorption costing.

Q: New trends in operations management include A) global focus B) mass customization C) empowered employees D) rapid product development E) All of the above are new trends in operations management.

Q: Which of the following is not a current trend in operations management? A) just-in-time performance B) global focus C) supply-chain partnering D) mass customization E) All of the above are current trends.

Q: A company reports the following information regarding its production cost: Units produced 22,000 units Direct labor $31 per unit Direct materials $27 per unit Variable overhead ? in total Fixed overhead $2,750,000 in total

Q: Current trends in operations management include all of the following except A) just-in-time performance B) rapid product development C) mass customization D) empowered employees E) All of the above are current trends.

Q: A company reports the following information regarding its production cost: Units produced 14,000 units Direct labor $13 per unit Direct materials $3 per unit Variable overhead ? in total Fixed overhead $56,000 in total

Q: Which of the following is a similarity between goods and services? A) mass production B) consistency C) automation D) application of operations management E) all of the above

Q: Castaway Company reports the following first year production cost information: Units produced 53,000 units Units sold 51,000 units Sales price $150 per unit Direct labor $8 per unit Direct materials $4 per unit Variable overhead $2,173,000 in total Fixed overhead $3,339,000 in total Operating expenses $1,000,000 in total a. Determine the net income using variable costing. b. Determine the net income using absorption costing. a. Product cost: $8 DL + $4 DM + ($2,173,000/53,000) VOH = $53 per unit under variable costing NI = ($150 - $53)(51,000 units) - $3,339,000 - $1,000,000 = $608,000 b. Product cost: $53 + ($3,339,000/53,000) FOH = $116 per unit under absorption costing NI = ($150 - $116)(51,000 units) - $1,000,000 = $734,000

Q: Which of the following attributes is most typical of a service? A) production and consumption occur simultaneously B) tangible C) mass production D) consistency E) easy to automate

Q: Castaway Company reports the following first year production cost information: Units produced 53,000 units Units sold 51,000 units Direct labor $8 per unit Direct materials $4 per unit Variable overhead $2,173,000 in total Fixed overhead $3,339,000 in total a. Compute production cost per unit under variable costing. b. Compute production cost per unit under absorption costing. c. Determine the cost of ending inventory using variable costing. d. Determine the cost of ending inventory using absorption costing.

Q: Which of the following statements is true? A) Manufacturing now constitutes the largest economic sector in postindustrial societies B) The number of people employed in manufacturing has increased since 1950 C) Each manufacturing employee now produces about 20 times more than in 1950 D) All of the above are true. E) None of the above is true.

Q: Lukin Corporation reports the following first year production cost information: Units produced 62,000 units Units sold 59,000 units Sales price $350 per unit Direct labor $41 per unit Direct materials $15 per unit Variable overhead $9,300,000 in total Fixed overhead $4,340,000 in total Operating expenses $1,000,000 a. Compute production cost per unit under variable costing. b. Compute production cost per unit under absorption costing. c. Determine the net income using variable costing. d. Determine the net income using absorption costing.

Q: Which of the following is not a typical service attribute? A) intangible product B) easy to store C) customer interaction is high D) simultaneous production and consumption E) difficult to resell

Q: Which of the following services is least likely to be unique, i.e., customized to a particular individual's needs? A) dental care B) hairdressing C) legal services D) elementary education E) computer consulting

Q: Lukin Corporation reports the following first year production cost information. Units produced 62,000 units Units sold 59,000 units Direct labor $41 per unit Direct materials $15 per unit Variable overhead $9,300,000 in total Fixed overhead $4,340,000 in total a. Compute production cost per unit under variable costing. b. Compute production cost per unit under absorption costing. c. Determine the cost of ending inventory using variable costing. d. Determine the cost of ending inventory using absorption costing.

Q: Which is not true regarding differences between goods and services? A) Services are generally produced and consumed simultaneously; tangible goods are not. B) Services tend to be more knowledge-based than goods. C) Services tend to have a more inconsistent product definition than goods. D) Goods tend to have higher customer interaction than services. E) None of the above is true.

Q: Home Base, Inc. reports the following production cost information: Units produced 97,000 units Units sold 92,000 units Direct labor $17 per unit Direct materials $34 per unit Variable overhead $2,522,000 in total Fixed overhead $1,940,000 in total a. Compute production cost per unit under variable costing. b. Compute production cost per unit under absorption costing. c. Determine the cost of ending inventory using variable costing. d. Determine the cost of ending inventory using absorption costing.

Q: Which is not true regarding differences between goods and services? A) Tangible goods are generally produced and consumed simultaneously; services are not. B) Most goods are common to many customers; services are often unique to the final customer. C) Services tend to have a more inconsistent product definition than goods. D) Services tend to have higher customer interaction than goods. E) All of the above are true.

Q: Home Base, Inc. reports the following production cost information: Beginning inventory 10,000 units Units produced 97,000 units Units sold 92,000 units Direct labor $17 per unit Direct materials $34 per unit Variable overhead $2,522,000 in total Fixed overhead $1,940,000 in total Operating costs $2,000,000 in total Assume that productions costs have remained the same since the previous period and all units are sold for $137.00 per unit. a. Compute production cost per unit under variable costing. b. Compute production cost per unit under absorption costing. c. Determine net income using variable costing. d. Determine net income using absorption costing.

Q: The service sector makes up approximately what percentage of all jobs in the United States? A) 12% B) 40% C) 66% D) 79% E) 90%

Q: Which of the following statements is true? A) The person most responsible for initiating the use of interchangeable parts in manufacturing was Eli Whitney. B) The origins of management by exception are generally credited to Frederick W. Taylor. C) The person most responsible for initiating the use of interchangeable parts in manufacturing was Walter Shewhart. D) The origins of the scientific management movement are generally credited to Henry Ford. E) The person most responsible for initiating the use of interchangeable parts in manufacturing was Henry Ford.

Q: Triton Industries reports the following information regarding its production cost: Units produced 77,000 units Direct labor $27 per unit Direct materials $12 per unit Variable overhead $2,541,000 in total Fixed overhead $3,311,000 in total a. Compute production cost per unit under variable costing. b. Compute production cost per unit under absorption costing. a. $27 DL + $12 DM + ($2,541,000/77,000) VOH = $72 per unit under variable costing b. $72 + ($3,311,000/77,000) FOH = $115 per unit under absorption costing

Q: Which of the following is the best example of a pure service? A) counseling B) oil Change C) heart transplant D) electric Co-Op E) all of the above

Q: Blackbird, Incorporated reports the following information regarding its production cost: Units produced 39,000 units Direct labor $13 per unit Direct materials $17 per unit Variable overhead $7,800,000 in total Fixed overhead $9,750,000 in total a. Compute production cost per unit under variable costing. b. Compute production cost per unit under absorption costing. a. $13 DL + $17 DM + ($7,800,000/39,000) VOH = $230 per unit under variable costing b. $230 + ($9,750,000/39,000) FOH = $480 per unit under absorption costing

Q: Assume a company sells a given product for $18 per unit. Variable selling costs are $0.70 per unit and variable production costs are $5.30 per unit. If the company breaks even when selling 4,000,000 units, what are total fixed costs?

Q: The field of operations management is shaped by advances in which of the following fields? A) chemistry and physics B) industrial engineering and management science C) biology and anatomy D) information technology E) all of the above

Q: Who among the following is associated with contributions to quality control in operations management? A) Charles Babbage B) Henry Ford C) Frank Gilbreth D) W. Edwards Deming E) Henri Fayol

Q: Henry Ford is noted for his contributions to A) material requirements planning B) statistical quality control C) assembly line operations D) scientific management E) time and motion studies

Q: Assume a company sells a given product for $33.28 per unit. How many units must the company sell to break-even if variable selling costs are $1.40 per unit, variable production costs are $23.56 per unit, and total fixed costs are $2,080,000?

Q: The "Father of Scientific Management" is A) Henry Ford B) Frederick W. Taylor C) W. Edwards Deming D) Frank Gilbreth E) just a figure of speech, not a reference to a person

Q: A company is currently operating at 70% capacity producing 8,000 units. Cost information relating to this current production is shown in the following table: Per Unit Sales price $15 Direct material $3.20 Direct labor $7.10 Variable overhead $0.05 Fixed overhead $0.60 The company has been approached by a customer with a request for a special order for 1,500 units. The sales price per unit for this special order is $10. Should the company accept the special order?

Q: The person most responsible for popularizing interchangeable parts in manufacturing was A) Frederick Winslow Taylor B) Henry Ford C) Eli Whitney D) Whitney Houston E) Lillian Gilbreth

Q: Eli Whitney, in the __________, provided the foundations for __________ in operations management. A) 1920s; statistical sampling B) United Kingdom; mass production C) U.S. Army; logistics D) nineteenth century; interchangeable parts E) none of the above

Q: Walter Shewhart, in the __________, provided the foundations for __________ in operations management. A) 1920s; statistical sampling B) United Kingdom; mass production C) U.S. Army; logistics D) nineteenth century; interchangeable parts E) none of the above

Q: What is the general procedure for converting variable costing net income to absorption costing net income?

Q: Walter Shewhart is listed among the important people of operations management because of his contributions to A) assembly line production B) measuring the productivity in the service sector C) just-in-time inventory methods D) statistical quality control E) all of the above

Q: What are the limitations of using variable costing?

Q: ASQ, ISM, APICS, and PMI are important professional organizations to operations management because A) they provide certification for professionals B) they allow professionals to keep up with industry developments C) they facilitate professional networking D) none of the above E) all of the above

Q: Which of the following are part of the Ten Critical Decisions of Operations Management? I. Design of goods and services II. Managing Quality III. Layout Strategy IV. Marketing V. Pricing of Goods and Services A) I,II,V B) I,II,IV C) II,III,V D) I,II,III E) All of the above

Q: What is a contribution margin report?

Q: How will net income under variable costing compare to net income under absorption costing in the following three situations? Explain briefly the cause of any differences. (a) Units produced equal units sold (b) Units produced exceed units sold (c) Units produced are less than units sold

Q: The Ten Critical Decisions of Operations Management include A) finance/accounting B) advertising C) process and capacity design D) pricing E) all of the above

Q: How does contribution margin differ from gross margin?

Q: Which of the following is not one of The Ten Critical Decisions of Operations Management? A) layout strategy B) maintenance C) process and capacity design D) mass customization E) supply-chain management

Q: The Ten Critical Decisions of Operations Management include A) layout strategy B) maintenance C) process and capacity design D) managing quality E) all of the above

Q: What is the formula to compute manufacturing margin?

Q: What are the benefits of using variable costing when striving to control costs? Are these benefits available under absorption costing?

Q: All of the following decisions fall within the scope of operations management except for A) creating the company income statement B) design of goods and processes C) location of facilities D) managing quality E) All of the above fall within the scope of operations management.

Q: An operations manager is not likely to be involved in A) the design of goods and services to satisfy customers' wants and needs B) the quality of goods and services to satisfy customers' wants and needs C) the identification of customers' wants and needs D) work scheduling to meet the due dates promised to customers E) maintenance schedules

Q: When excess capacity exists, what is the minimum special order price a manager should accept to increase net income?

Q: Which of the following is not an element of the management process? A) controlling B) leading C) planning D) pricing E) staffing

Q: How can the use of absorption costing result in overproduction?

Q: Illiteracy and poor diets have been known to cost countries up to what percent of their productivity? A) 2% B) 5% C) 10% D) 20% E) 50%

Q: What costs are treated as product costs under the variable costing method?

Q: The five elements in the management process are A) plan, direct, update, lead, and supervise B) accounting, finance, marketing, operations, and management C) organize, plan, control, staff, and manage D) plan, organize, staff, lead, and control E) plan, lead, organize, manage, and control

Q: What costs are treated as product costs under the absorption costing method?

Q: Reasons to study Operations Management include learning about A) how people organize themselves for productive enterprise B) how goods and services are produced C) what operations managers do D) a costly part of the enterprise E) all of the above

Q: Fixed administrative X X

Q: Reasons to study Operations Management include A) studying how people organize themselves for productive enterprise B) knowing how goods and services are consumed C) understanding what human resource managers do D) learning about a costly part of the enterprise E) A and D

Q: Variable administrative X X

Q: Which of the following tasks within an Airline Company are related to Operations? A) Crew Scheduling B) International Monetary Exchange C) Sales D) Advertising E) Accounts Payable

Q: Fixed selling X X

Q: The marketing function's main concern is with A) producing goods or providing services B) procuring materials, supplies, and equipment C) building and maintaining a positive image D) generating the demand for the organization's products or services E) securing monetary resources

Q: Variable selling X X

Q: Which of the following would not be an operations function in a commercial bank? A) auditing B) teller scheduling C) maintenance D) collection E) check clearing

Q: Fixed manufacturing overhead X X

Q: Which of the following pioneers was not making a professional impact during the Scientific Management Era? A) Frank Gilbreth B) W. Edwards Deming C) Henry L. Gantt D) Lillian Gilbreth E) Frederick W. Taylor

Q: Variable manufacturing overhead X X

Q: Which of the following are the primary functions of all organizations? A) production/operations, marketing, and human resources B) marketing, human resources, and finance/accounting C) sales, quality control, and production/operations, D) marketing, production/operations, and finance/accounting E) research and development, finance/accounting, and purchasing

Q: Direct labor X X

Q: Operations management is applicable A) mostly to the service sector B) to services exclusively C) mostly to the manufacturing sector D) to all firms, whether manufacturing or service E) to the manufacturing sector exclusively

Q: Direct materials X X

Q: An operations task performed at Hard Rock Caf is A) borrowing funds to build a new restaurant B) advertising changes in the restaurant menu C) calculating restaurant profit and loss D) preparing employee schedules E) all of the above