Q&A Hero

Q: The __________ is an iterative technique for moving from an initial feasible solution to an optimal solution in the transportation method.

Q: The __________ develops an initial feasible solution for a transportation model by starting at the upper left-hand cell of a table and systematically allocating units to shipping points.

Q: The three information needs of a transportation problem are the origin points and the capacity at each, the destination points and the demand at each, and __________.

Q: The __________ finds the least-cost means of shipping supplies from several origins to several destinations.

Q: The elements of a transportation problem that supply goods are referred to as __________.

Q: Describe and compare the three cost estimation methods used to develop a cost equation.

Q: Which of the following is true for degenerate problems? A) They do not contain a feasible solution. B) They cannot contain an optimal solution. C) Supply is greater than demand. D) Demand is greater than supply. E) None of the above

Q: Which of the following combinations of sources and destinations would fill no more than 25% of cells with quantities to be shipped for the optimal solution? A) 1 to 1 B) 1 to 4 C) 4 to 1 D) 8 to 2 E) 5 to 16

Q: A transportation model fills one-half of its cells under the optimal solution. Which of the following most closely describes the number of sources compared to the number of destinations? A) 1 to 1 B) 2 to 2 C) 3 to 3 D) 4 to 3 E) 4 to 4

Q: A cost pool is a collection of costs that are related to the same or similar activity.

Q: Suppose the solution for a transportation model fills 5 cells with quantities to be shipped. Which of the following combinations of sources and destinations would be degenerate? A) 2 sources, 4 destinations B) 3 sources, 3 destinations C) 4 sources, 2 destinations D) 5 sources, 1 destination E) None of the above are degenerate.

Q: Activities are the cost objects of the second stage of ABC.

Q: Total demand for a transportation model is 15 while total supply is 20. Which of the following should be included? A) a dummy source of 20 units B) a dummy destination of 5 units C) a dummy source of 5 units D) a dummy destination of 20 units E) none of the above

Q: The premise of ABC is that it takes activities to make products and provide services and these activities drive costs.

Q: A large transportation problem has 220 origins and 1360 destinations. The optimal solution of this problem will fill no more than about __________ of cells with quantities to be shipped. A) one-half of one percent B) five percent C) ten percent D) twenty-five E) All cells will be occupied.

Q: The departmental overhead rate method allows each department to have its own overhead rate and its own allocation base.

Q: A transportation problem has 4 origins and 2 destinations. The optimal solution of this problem will fill no more than __________ cells with quantities to be shipped. A) 5 B) 6 C) 8 D) 20 E) All cells will be occupied.

Q: A transportation problem has 8 origins and 6 destinations. The optimal solution of this problem will fill no more than __________ cells with quantities to be shipped. A) 2 B) 13 C) 14 D) 48 E) cannot be calculated without knowing the supply and demand totals

Q: Products are the first stage cost objects when using a departmental overhead rate method.

Q: By definition, costs classified as overhead are consumed in basically the same manner regardless of the process involved.

Q: In a transportation problem, degeneracy means that A) the problem was improperly constructed, and must be reformulated B) the assumptions of the transportation model have not been met C) the number of filled cells is too small to allow the calculation of improvement indices D) the total supply and the total demand are unbalanced E) the number of origins is not equal to the number of destinations

Q: The departmental overhead rate method uses a different overhead rate for each production department.

Q: When the number of shipments in a feasible solution is less than the number of rows plus the number of columns minus one A) the solution is optimal B) a dummy source must be created C) a dummy destination must be created D) there is degeneracy, and an artificial allocation must be created E) the closed path has a triangular shape

Q: A transportation problem has two origins: A can supply 20 units and B can supply 30 units. This problem has two destinations: C requires 25 units and D requires 35 units. Which of the following is true? A) The problem will require a dummy demand with a capacity of 10 units. B) The problem is unbalanced and cannot be solved by the transportation method. C) The problem will require a dummy supply with a capacity of 10 units. D) Destinations C and D must each receive 5 units less than they require. E) None of the above is true.

Q: Data concerning volume-related measures are readily available in most manufacturing settings.

Q: The plantwide overhead rate is determined by using volume-related measures.

Q: An improvement index indicates A) whether a method other than the stepping-stone should be used B) whether a method other than the northwest-corner rule should be used C) how much total cost would increase or decrease if a single unit was reallocated to that cell D) whether the transportation cost in the upper left-hand corner of a cell is optimal E) how much total cost would increase or decrease if the largest possible quantity were reallocated to that cell

Q: Departments are the cost objects when the plantwide overhead rate method is used.

Q: A transportation problem has improvement indices of 5, 4, 0, and -3. Which of the following is always true? A) The transportation model is at its ideal solution. B) The transportation model is at a feasible solution. C) The total cost saved by changing one unit on the route with an improvement index of 5 would be $5. D) The transportation matrix has four empty squares. E) Both B and D

Q: Examples of volume-related measures include direct labor hours, direct labor cost dollars, and machine hours.

Q: One difference between the stepping-stone method compared to the Northwest-corner and intuitive method is that A) the stepping-stone method never finds a feasible solution B) the stepping-stone method ignores costs C) the stepping-stone method ALWAYS finds a lower-cost solution D) the stepping-stone method guarantees an optimal solution E) All of the above or None of the above.

Q: The stepping-stone method A) is an alternative to using the northwest-corner rule B) often involves tracing closed paths with a triangular shape C) is used to identify the relevant costs in a transportation problem D) is used to evaluate the cost effectiveness of shipping goods via transportation routes not currently in the solution E) helps determine whether a solution is feasible or not

Q: The cost to heat a manufacturing facility can be directly linked to the number of units produced.

Q: Distorted product cost information can result in poor decisions.

Q: Consider the transportation problem and its initial solution in the table below. What is the improvement index for the empty cell Source 1 Destination 3? A) 0 B) -14 C) -23 D) -70 E) 115

Q: In a minimization problem, a positive improvement index in a cell indicates that A) the solution is optimal B) the total cost will increase if units are reallocated to that cell C) there is degeneracy D) the total cost will decrease if units are reallocated to that cell E) the problem has no feasible solution

Q: Product costs consist of direct labor, direct materials, manufacturing overhead, and indirect costs.

Q: In a minimization problem, a negative improvement index in a cell indicates that the A) solution is optimal B) total cost will increase if units are reallocated to that cell C) current iteration is worse than the previous one D) total cost will decrease if units are reallocated to that cell E) problem has no feasible solution

Q: In competitive markets, the price of a given product is established through the forces of supply and demand.

Q: Consider the transportation problem and its optimal solution in the tables below. The cell Source 3 Destination 3 is currently empty. What would be the change in the objective function if the largest possible amount were shipped using that route, leaving all the supply and demand conditions unchanged? A) 0 B) fifty units C) a decrease of $9 D) an increase of $450 E) an increase of $630

Q: A company identified the following partial list of activities, costs, and activity drivers expected for the next year: Activity Expected Costs Cost Driver Extrusion costs $83,600 Number batches made Handling costs $8,800 Number of orders filled Packaging costs $40,500 Number of units made Product A Product B Production volume 750,000 units 600,000 units Batches made 200 batches 750 batches Orders filled 75 200 Calculate activity rates for each of the three activities using activity-based costing (ABC). A. Extrusion: $304 per batch; handling: $32 per unit; packaging: $.03 per unit. B. Extrusion: $88 per batch; handling: $32 per order; packaging: $.03 per unit. C. Extrusion: $88 per order; handling: $32 per unit; packaging: $.03 per batch. D. Extrusion: $418 per batch; handling: $117.33 per order; packaging: $.054 per unit. E. Extrusion: $118.13 per batch; handling: $44 per order; packaging: $.0675 per unit.

Q: Consider the transportation problem and its optimal solution in the tables below. What is the value of the objective function? A) 0 B) $169 C) 300 units D) $2,100 E) $3,140

Q: Refer to the data above. How much overhead cost will be assigned to the dessert bar product line using activity-based costing (ABC.? A. 340,750 B. $247,818 C. $16,000 D. $297,500 E. $313,500

Q: The total cost of the optimal solution to a transportation problem A) is calculated by multiplying the total supply (including any dummy values) by the average cost of the cells B) cannot be calculated from the information given C) can be calculated based only on the entries in the filled cells of the solution D) can be calculated from the original northwest corner solution E) is found by multiplying the amounts in each cell by the cost for that cell for each row and then subtracting the products of the amounts in each cell times the cost of each cell for the columns

Q: Refer to the data in the preceding tables. How much overhead cost will be assigned to the ice cream sandwich product line using activity-based costing (ABC.? A. $340,000 B. $368,000 C. $28,000 D. $850.08 E. $433,682

Q: In transportation model analysis the stepping-stone method is used to A) obtain an initial optimum solution B) obtain an initial feasible solution C) evaluate empty cells for possible degeneracy D) balance supply and demand E) evaluate empty cells for potential solution improvements

Q: A transportation problem has an optimal solution when A) all of the improvement indices are greater than or equal to zero B) all demand and supply constraints are satisfied C) the number of filled cells is one less than the number of rows plus the number of columns D) all the squares are used E) all origin-destination combinations have been made equally low in cost

Q: A transportation problem has a feasible solution when A) all of the improvement indices are greater than or equal to zero B) all demand and supply constraints are satisfied C) the number of filled cells is one less than the number of rows plus the number of columns D) all the squares are used E) the solution yields the lowest possible cost

Q: Refer to the data above. What are the overhead rates used to apply material handling (MH) and storage costs (SC. using activity-based costing? A. MH $300/batch; SC $2.73/unit. B. MH $300/batch; SC $.20/lb. C. MH $525/batch; SC $.205/unit. D. MH $700/batch; SC $.205/lb. E. MH $700/batch; SC $8.20/lb.

Q: A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools: Budgeted Activity Activity Cost Pool Budgeted Cost Product A1 Product B2 Activity 1 $48,000 1,200 4,800 Activity 2 $63,000 2,240 4,760 Activity 3 $80,000 7,200 800 Annual production and sales level of Product A1 is 8,480 units, and the annual production and sales level of Product B2 is 22,310 units. What is the approximate overhead cost per unit of Product B2 under activity-based costing? A. $8.00 B. $9.00 C. $10.00 D. $12.00 E. $4.00

Q: The main difference between the intuitive lowest-cost method and the Northwest-corner rule is that A) the intuitive lowest-cost method always generates a better solution B) the Northwest-corner rule is faster C) the Northwest-corner rule ignores cost D) only the intuitive lowest-cost method generates an optimal solution E) None of the above are accurate.

Q: For the problem below, what is the quantity assigned to the cell Source 3-Destination 1 using the intuitive method for an initial feasible solution? A) 3 B) 13.333 C) 30 D) 45 E) 50

Q: For the problem below, what is the quantity assigned to the cell Source 1-Destination 2 using the intuitive method for an initial feasible solution? A) 1 B) 5 C) 30 D) 45 E) 50

Q: The Northwest-Corner rule's biggest flaw is that A) it ignores costs B) it cannot generate feasible solutions C) it never generates ideal solutions D) it ignores shipping time E) There are no major flaws.

Q: For the problem data set below, what is the northwest corner allocation to the cell Source 3-Destination 3? A) 0 B) 15 C) 20 D) 35 E) 45

Q: A company uses activity-based costing to determine the costs of its three products: A, B and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: Budgeted Activity Activity Cost Pool Budgeted Cost Product A Product B Product C Activity 1 $70,000 6,000 9,000 20,000 Activity 2 $45,000 7,000 15,000 8,000 Activity 3 $82,000 2,500 1,000 1,625 How much overhead will be assigned to Product B using activity-based costing? A. $56,500 B. $78,000 C. $62,500 D. $197,000 E. $70,000

Q: For the problem data set below, what is the northwest corner allocation to the cell Source 1 -Destination 2? A) 0 B) 15 C) 25 D) 45 E) 35

Q: For the problem data set below, what is the northwest corner allocation to the cell Source 1-Destination 1? A) 0 B) 2 C) 15 D) 90 E) 30

Q: The northwest-corner rule is best used A) to minimize the total shipping cost from several origins to several destinations B) to calculate whether a feasible solution is also an optimal solution C) to calculate how much to transfer from one shipping route to another D) to generate an initial feasible solution to a transportation problem E) to resolve cases of degeneracy in transportation problems

Q: All of the following are examples of facility sustaining costs except: A. Costs of cleaning the workplace. B. Costs of custodial work. C. Costs of personnel support. D. Costs of sampling product quality. E. Costs of employee recreational facilities.

Q: Consider the following activities that take place in a medical clinic. (a.) Cleaning exam rooms. (b.) Heating and air conditioning the clinic. (c.) Sending blood work to a lab. (d.) Dispensing medicine. Which of the following statements is true? A. Cleaning rooms and heating the clinic are both unit level activities. B. Sending blood work to the lab is a batch level activity. C. Sending blood work and dispensing medicine are both batch level activities. D. Cleaning rooms and dispensing medication are both product or service level activities. E. Heating the clinic and dispensing medication are both batch level activities.

Q: The initial solution to a transportation problem can be generated several ways, so long as A) it minimizes cost B) it ignores cost C) all supply and demand conditions are satisfied D) degeneracy does not exist E) all cells are filled

Q: Upon completion of the northwest-corner rule, which source-destination cell is guaranteed to be occupied? A) top-left B) top-right C) bottom-left D) bottom-right E) the cell with the lowest shipping cost (or at least one of them if theres a tie)

Q: Consider the following activities that take place in a veterinary clinic. (a.) Cleaning cages. (b.) Heating and air conditioning the clinic. (c.) Sending blood work to a lab. (d.) Dispensing medicine. Which of the following statements is true? A. Service entities cannot use ABC for overhead allocation. B. Cleaning cages is a facility level activity. C. Dispensing medicine is a facility level activity. D. Heating and air conditioning the clinic is a facility level activity. E. Sending blood work to a lab is a facility level activity.

Q: The transportation method is a special case of the family of problems known as A) regression problems B) decision tree problems C) linear programming problems D) simulation problems E) statistical problems

Q: Aurora Corporation produces outdoor security lighting products. All products go through three processes before completion. Use the expected overhead costs and related data shown below to compute departmental overhead rates based on machine hours in Department A1A; based on direct labor hours in Department B2B; and machine hours in Department C3C. Department A1A Department B2B Department C3C Direct labor hours 90,000 DLH 80,000 DLH 72,000 DLH Machine hours 54,000 MH 32,000 MH 54,000 MH Manufacturing overhead costs $540,000 $160,000 $216,000 A. Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $4 per MH. B. Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $3 per MH. C. Dept. A: $10 per MH; Dept B: $5 per DLH; Dept C: $4 per MH. D. Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $4 per MH. E. Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $3 per MH.

Q: The purpose of the transportation approach for location analysis is to minimize A) total costs B) total variable costs C) total fixed costs D) total shipping costs E) the number of shipments

Q: Use the above data for Wall Nuts, Inc. to compute the total manufacturing cost per unit of oak paneling assuming the company uses departmental overhead rates based on machine hours in Department A and machine hours in Department B. A. $8.70 B. $18.20 C. $21.95 D. $27.30 E. $36.00

Q: Which of the following is not information needed for a transportation problem? A) the cost of shipping one unit from each origin to each destination B) the set of destinations and the demand at each C) the set of origins and the demand at each origin D) the list of sources and the capacity at each E) None of the above is needed.

Q: Use the data for Wall Nuts, Inc. to compute the dollar amount of overhead applied to each unit of oak paneling, assuming the company uses departmental overhead rates based on machine hours in Department A and machine hours in Department B. A. $8.70 B. $1.40 C. $14.40 D. $26.25 E. $41.00

Q: The information needs of a transportation problem include A) the cost of shipping one unit from each origin to each destination B) the set of destinations and the demand of each C) the set of origins D) the supply at each origin E) all of the above

Q: Use the data for Wall Nuts, Inc. to compute departmental overhead rates based on machine hours in Department A and machine hours in Department B. A. $4.50 per MH in Dept A; $4.50 per MH in Dept B. B. $7.50 per MH in Dept A; $7.50 per MH in Dept. B. C. $4.50 per MH in Dept A; $7.50 per MH in Dept B. D. $2.70 per MH in Dept A; $6.00 per MH in Dept B. E. $0.60 per MH in Dept A; $0.80 per MH in Dept B.

Q: Which of the following is not needed in order to use the transportation model? A) the source points and their capacity B) the fixed costs of source points C) the destination points and their demand D) the cost of shipping one unit from each source to each destination E) All of these are needed.

Q: Tarnish Industries uses departmental overhead rates and is planning on a $4.10 per machine hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table. A. $307,500 B. $658,050 C. $401,800 D. $334,150 E. $735,950

Q: If demand exceeds supply in a transportation problem, the problem must be balanced by adding a dummy source with additional supply.

Q: Degeneracy occurs when the number of occupied squares is less than the number of rows plus the number of columns minus one.

Q: To handle degeneracy, a very small quantity is placed in one of the unused squares.

Q: A transportation problem with 8 sources and 6 destinations will have an optimal solution that uses at most 13 of the 48 possible routes.

Q: Compute Aztec's departmental overhead rate for the baking department based on machine hours. A. $1.50 per MH B. $5.00 per MH C. $0.75 per MH D. $0.50 per MH E. $2.08 per MH

Q: A transportation problem with a total supply of 500 and a total demand of 400 will have an optimal solution that leaves 100 units of supply unused.