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Q:
In linear programming, a statement such as "maximize contribution" becomes a(n)
A) constraint
B) slack variable
C) objective function
D) violation of linearity
E) decision variable
Q:
A major disadvantage of using a plantwide overhead rate is the extreme difficulty in gathering the needed information.
Q:
Which of the following is not a requirement of a linear programming problem?
A) an objective function, expressed in terms of linear equations
B) constraint equations, expressed as linear equations
C) an objective function, to be maximized or minimized
D) alternative courses of action
E) for each decision variable, there must be one constraint or resource limit
Q:
Management's pricing and cost decisions for a product are influenced by that product's cost assignments.
Q:
Which of the following represents valid constraints in linear programming?
A) 2X u2265 7X Y
B) 2X 7Y u2265 500
C) 2X + 7Y u2265100
D) 2X2 + 7Y u2265 50
E) All of the above are valid linear programming constraints.
Q:
Multiple cost pools are used when allocating overhead using the plantwide overhead rate method.
Q:
In which of the following has LP been applied successfully?
A) minimizing distance traveled by school buses carrying children
B) minimizing 911 response time for police patrols
C) minimizing labor costs for bank tellers while maintaining service levels
D) determining the distribution system for multiple warehouses to multiple destinations
E) all of the above
Q:
Activity-based costing first assigns costs to products and then uses these product costs to assign costs to manufacturing activities.
Q:
In linear programming, statements such as "the blend must consist of at least 10% of ingredient A, at least 30% of ingredient B, and no more than 50% of ingredient C" can be made into valid constraints even though the percentages do not add up to 100 percent.
Q:
#
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16-93
Q:
The graphical method of solving linear programming can handle only maximizing problems.
Q:
In sensitivity analysis, a zero shadow price (or dual value) for a resource ordinarily means that the resource has not been used up.
Q:
Sensitivity analysis of linear programming solutions can use trial and error or the analytic postoptimality method.
Q:
The optimal solution of a linear programming problem that consists of two variables and six constraints will probably not satisfy all six constraints as equalities.
Q:
In linear programming, if there are three constraints, each representing a resource that can be used up, the optimal solution must use up all of each of the three resources.
Answer: FALSE
13) The region that satisfies the constraint 4X + 15Z u2265 1000 includes the origin of the graph.
Answer: FALSE
Q:
The optimal solution to a linear programming problem is within the feasible region.
Answer: TRUE
11) For a linear programming problem with the constraints 2X + 4Y u2264 100 and 1X + 8Y u2264 100, two of its corner points are (0, 0) and (0, 25).
Answer: FALSE
Q:
Solving a linear programming problem with the iso-profit line solution method requires that we move the iso-profit line to each corner of the feasible region until the optimum is identified.
Q:
The region that satisfies all of the constraints in graphical linear programming is called the region of optimality.
Q:
In terms of linear programming, the fact that the solution is infeasible implies that the "profit" can increase without limit.
Q:
In a process costing system, direct materials used are debited to the __________ account, and indirect materials used are debited to the ____________ account.
Q:
Constraints are needed to solve linear programming problems by hand, but not by computer.
Q:
A ____________________ contains features of both process and job order costing systems.
Q:
In linear programming, a statement such as "maximize contribution" becomes an objective function when the problem is formulated.
Q:
Linear programming is an appropriate problem-solving technique for decisions that have no alternative courses of action.
Q:
A common form of the product-mix linear programming problem seeks to find that combination of products and the quantity of each that maximizes profit in the presence of limited resources.
Q:
One requirement of a linear programming problem is that the objective function must be expressed as a linear equation.
Q:
The third step in accounting for production activity in a period, before assigning and reconciling costs, is to compute the ______________________.
Q:
Linear programming helps operations managers make decisions necessary to make effective use of resources such as machinery, labor, money, time, and raw materials.
Q:
The second step in accounting for production activity in a period, after determining the physical flow of units, is to compute ______________________.
Q:
Operations Management, 10e (Heizer/Render)
Module B Linear Programming
True/False
Q:
There are three equally likely states of nature (High, Medium, and Low demand). If the large factory will post profits of $50,000, $25,000, and - $10,000 under these states of nature, respectively, what is the EMV of the factory?
A) $50,000
B) $25,000
C) $28,333.33
D) $21,666.67
E) none of the above
Q:
When solving decision trees, what phrase represents the act of dropping an alternative from consideration because it is less favorable than another available option?
A) cut the leaf
B) open the hatch
C) shake the tree
D) punt the ball
E) prune the branch
Q:
An ____________________is the number of units that could have been started and completed given the costs incurred during the period.
Q:
Process operations, also called process manufacturing or process production, is the ___________ production of similar products in a _____________________ flow of sequential steps.
Q:
Expected monetary value is most appropriate for problem solving that takes place
A) when conditions are average
B) when all states of nature are equally likely
C) when all alternatives are equally likely
D) under conditions of uncertainty
E) under conditions of risk
Q:
Port Manufacturing Company uses a process costing system. Materials are added at the beginning of the process. Direct labor and overhead are added evenly throughout the process. The company uses monthly reporting periods for its weighted-average process costing. The following are the operating and cost data information for October.
The October 1 beginning Work in Process Inventory consisted of 20,000 units. The costs for this inventory are $82,500 of direct materials, $24,400 of direct labor, and $48,800 of factory overhead. Factory overhead is applied at 200% of direct labor cost.
In addition to the beginning inventory costs, the company issued the following costs into Work in Process Inventory; direct materials, $240,000; direct labor, $68,000; factory overhead, $136,000.
During October, the company completed and transferred 60,000 units of its product to finished goods. At the end of the month, the Work in Process inventory consisted of 15,000 units that were 40% complete with respect to direct labor and factory overhead and 100% complete with respect to materials.
Prepare the company's process cost summary for October using the weighted average method.
Q:
A decision maker who uses the maximin criterion when solving a problem under conditions of uncertainty is
A) an optimist
B) a pessimist
C) an economist
D) an optometrist
E) making a serious mistake; maximin is not appropriate for conditions of uncertainty
Q:
The decision criterion that would be used by an optimistic decision maker solving a problem under conditions of uncertainty would be the
A) expected monetary value criterion
B) equally likely criterion
C) maximax criterion
D) maximin criterion
E) minimin criterion
Q:
Prepare journal entries to record the following production activities for Oaks Manufacturing.
a. Incurred overhead costs of $79,000 (paid in cash).
b. Applied overhead at 110% of direct labor costs which are $93,900.
c. Transferred completed products with a cost of $258,200 to finished goods inventory.
d. Sold $602,000 of product on credit. Cost is $271,000.
Q:
Doing nothing would yield how much profit if favorable market conditions prevail according to the following decision table? Alternative
Favorable market
Unfavorable Market Do Nothing
$20,000
-$10,000 A) $5,000
B) $20,000
C) -$10,000
D) $0
E) unable to determine
Q:
The outcome of an alternative/state of nature combination is a(n)
A) price
B) conditional value
C) expected value
D) conditional probability
E) All of the above are correct.
Q:
Prepare general journal entries to record the following production activities for Oaks Manufacturing.
a. Purchased $82,000 of raw materials on credit.
b. Used $63,500 of direct materials in production.
c. Used $12,800 of indirect materials.
Q:
A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a(n)
A) isoquant table
B) payback period matrix
C) payoff table
D) feasible region
E) decision tree
Q:
The following table of cost information is available for the Renaldo Company for the month of November: Goods in Process Inventory Mixing
Goods in Process Inventory Molding
Finished Goods Inventory Beginning Inventory
$12,000
$15,000
$24,000 Costs incurred: Direct materials
22,000
14,000 Direct labor
32,000
17,000 Overhead applied
47,000
24,500 Costs transferred out
(100,000)
(152,000) Costs transferred in 100,000
152,000 Cost of goods sold (149,000) Ending inventory
13,000
18,500
27,000 Based on the table of cost information above, prepare the general journal entry required to record the:
a. Transfer of goods from the molding department to the finished goods inventory.
b. Cost of goods sold for November.
Q:
In terms of decision theory, an occurrence or situation over which the decision maker has no control is called a(n)
A) decision under uncertainty
B) decision tree
C) state of nature
D) alternative
E) none of the above
Q:
During the year, LT Corp. introduced 132,000 units into production and 144,000 units were completed and transferred to finished goods. At the end of the year, the company had 13,600 units in process that were 80% complete. Determine how many units the company had in Work in Process at the beginning of the year.
Q:
The following decision tree has how many state of nature nodes A) 0
B) 1
C) 2
D) 3
E) 4
Q:
Grayson Company had 8,700 units in beginning inventory with accumulated costs for direct materials of $17,900, $16,500 direct labor, and $13,200 of overhead. During July, the company completed and transferred 50,000 units to finished goods. Costs incurred in the current period included $45,000 of direct materials, $58,500 of direct labor, and $46,800 of factory overhead. Ending inventory consisted of 12,000 units which were 90% complete with respect to materials and 50% complete with respect to labor and overhead. Compute the value assigned to ending inventory based on the weighted average method of inventory costing.
Q:
A square node on a decision tree infers that
A) the node splits into various states of nature, of which only one will occur
B) there are several alternatives available
C) the manager must choose an alternative
D) both B and C
E) A, B, and C
Q:
Kominski Company completed and transferred 90,000 units during the current period. Based on the following information, determine the cost of the goods completed during the current reporting period and journalize the transfer. Direct Materials
Direct Labor/OH Costs of Beginning Work in Process:
$576,000
$400,000 Costs incurred this period
2,400,000
5,120,000 Equivalent units of production
96,000
92,000
Q:
The last step of the decision-making process is to
A) develop a model
B) evaluate each alternative
C) pick the best alternative
D) implement the decision
E) check the decision with senior management
Q:
Bagger, Inc. uses a process costing system. The following operating and cost data occurred during October: October 1, Inventory:
30,000 units 100% complete for materials ($60,000) and 50% complete for direct labor ($7,500) and overhead ($15,000) October 31, Inventory:
20,000 units 100% complete for materials and 30% complete for direct labor and overhead Units started during Oct.:
40,000 units October production costs:
Direct materials
$110,100 Direct labor
28,900 Overhead
57,800 Materials are added at the beginning of the process. Direct labor and overhead are incurred evenly throughout the process. Prepare the October process cost summary assuming the weighted average method of inventory costing.
Q:
The first step, and a key element, in the decision-making process is to
A) consult a specialist
B) clearly define the problem
C) develop objectives
D) monitor the results
E) select the best alternative
Q:
Giga Company uses a weighted average process cost system. The department started and finished 129,000 units during the current period. The ending inventory consists of 60,000 units that are 75% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $262,500 and overhead costs of $126,000.
(a) Compute the equivalent cost per unit for direct labor.
(b) Compute the equivalent cost per unit for overhead.
Q:
Which of the following is not considered a step in the decision-making process?
A) Clearly identify the problem.
B) Select the best alternative.
C) Develop objectives.
D) Evaluate alternatives.
E) Minimize costs whenever possible.
Q:
Refer to the following information about the Shaping Department of the Minnesota Factory for the month of August. Minnesota Factory uses the FIFO method of inventory costing. Equivalent Units
Total Cost Beginning Work in Process: Costs from prior month $ 7,000 Materials added
300 Labor and overhead added
375 Started and completed goods: Materials added
2,000 Labor and overhead added
2,000 Ending Work in Process: Materials added
320 Labor and overhead added
360 The cost per equivalent unit of materials is $10.00, and the cost per equivalent unit of labor and overhead is $22.00.Prepare a cost reconciliation for the month of August.
Q:
In a decision tree, the expected monetary values are computed by working from right to left.
Q:
Decision trees and decision tables can both solve problems requiring a single decision, but decision tables are the preferred method when a sequence of decisions is involved.
Q:
The expected value of perfect information is the same as the expected value with perfect information.
Q:
If a decision maker has to make a certain decision only once, expected monetary value is a good indication of the payoff associated with the decision.
Q:
Wang Company provides the following data for the current year:
Estimated Factory Overhead 7,800
Factory Overhead Incurred $11,400
Factory Overhead Applied ?
Estimated Direct Labor Cost 12,000
Direct Labor Cost Incurred 11,800
Required:
a. Calculate the predetermined overhead allocation rate based on direct labor.
b. Determine the amount of overhead applied to production.
c. Prepare the journal entry to apply factory overhead to Work in Process.
Q:
The expected monetary value of a decision alternative is the sum of all possible payoffs from the alternative, each weighted by the probability of that payoff occurring.
Q:
An example of expected monetary value would be the payoff from selecting a particular alternative when a particular state of nature occurs.
Q:
The expected value with perfect information assumes that all states of nature are equally likely.
Q:
If a decision maker knows for sure which state of nature will occur, he/she is making a decision under certainty.
Q:
A company's January 1 Work in Process inventory contained 30,000 units that were 25% complete with respect to direct labor. The beginning inventory was completed this year and another 120,000 units were started. Of those started, 80,000 were finished and the remaining 40,000 were 30% complete. Calculate the equivalent units of production for the year using the FIFO method.
Q:
The maximin criterion is pessimistic, while the maximax criterion is optimistic.
Q:
The maximax criterion of decision making requires that all decision alternatives have an equal probability of occurrence.
Q:
Refer to the following information about the Finishing Department in the Davidson Factory for the month of June. Davidson Factory uses the weighted-average method of inventory costing.
Beginning Work in Process inventory:
Physical units 5,000 units
% complete for materials 70%
% complete for labor and overhead 25%
Materials cost from May $7,350
Labor and overhead cost from May $3,125
Product started and completed:
Physical units 40,000 units
Ending Work in Process inventory:
Physical units 4,000 units
% complete for materials 40%
% complete for labor and overhead 10%
Manufacturing costs for June:
Materials $96,975
Labor and overhead"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $79,470
Compute the total cost of all units that were completed and transferred to finished goods during June. Compute the total cost of the ending Work in Process inventory.
Q:
An example of a conditional value would be the payoff from selecting a particular alternative when a particular state of nature occurs.
Q:
Refer to the following information about the Finising Department in the Davidson Factory for the month of June. Davidson Factory uses the FIFO method of inventory costing.
Beginning Work in Process inventory:
Physical units 5,000 units
% complete for materials 70%
% complete for labor and overhead 25%
Materials cost from May $7,350
Labor and overhead cost from May $3,125
Product started and completed:
Physical units 40,000 units
Ending Work in Process inventory:
Physical units 4,000 units
% complete for materials 40%
% complete for labor and overhead 10%
Manufacturing costs for June:
Materials $96,975
Labor and overhead"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $79,470
Compute the equivalent cost per unit for direct materials, direct labor and overhead for June.
Q:
If a decision maker can assign probabilities of occurrences to the states of nature, then the decision-making environment is Decision Making under Uncertainty.
Q:
In a decision tree, a square symbol represents a state of nature node.
Q:
A company uses a process costing system and the weighted average method for inventory costs. The following information is available regarding direct labor for the current year:
Ending Work in Process 5,300 units, 50% complete
Units completed and transferred to finished goods 28,700 units
Direct labor costs during the year $199,300
Calculate the average cost per equivalent unit for direct labor (round to the nearest cent).
Q:
A state of nature is an occurrence of a situation over which the decision maker has little or no control.
Q:
The last step in the analytic decision process clearly defines the problem and the factors that influence it.
Q:
Analytic decision making is based on logic and considers all available data and possible alternatives.
Q:
Operations Management, 10e (Heizer/Render)
Module A Decision-Making Tools
True/False
Q:
The following data is available for Donaldson Corp. for the current year:
Beginning inventory of Work in Process 12,000 units, 60% completed
Ending inventory of Work in Process 18,000 units, 30% completed
Units completed and transferred to
finished goods during the year 144,000 units
Calculate the equivalent units of production for the year using the weighted average method.
Q:
The EMV of a decision with three states of nature is $50. If the profit/value of A is 1/3 of B and B is 1/3 of C, determine the profit from A if B and C have an equal chance of occurring that combined is twice the chance of A occurring.