Question;Reminder: There are several;versions of this week?s questions, please make sure you have reviewed and;compared our questions with your questions.;ACCT434 Advanced Cost Management;Week 7 Quality Control Inventory;Management (Version 2);1. (TCO 11) The four cost categories in a cost of quality program are;(Points: 3);product design, process design, internal success, and external success.;prevention, appraisal, internal failure, and external failure.;design, conformance, control, and process.;design, process specification, on-time delivery, and customer;satisfaction.;2. (TCO 11) A key question in relevant cost and relevant revenue;analysis is (Points: 3);By how much can sales be increased and costs reduced?;What purpose is best served for cost allocation and which;criterion is most appropriate?;How will total costs and total revenues change under each;solution?;What are the amounts of incremental costs and incremental;revenues under each alternative?;3. (TCO 11) Delays in customer-response time occur because of (Points;3);uncertainty about when customers will order products.;unused capacity which impedes average manufacturing time.;customers' response in paying invoices on time.;overemphasis on measuring time drivers.;4. (TCO 11) A liability claim is an example of (Points: 3);external failure costs.;internal failure costs.;prevention costs.;appraisal costs.;5. (TCO 11) Regal Products has a budget of $900,000 in 20X3 for;prevention costs. If it decides to automate a portion of its prevention;activities, it will save $60,000 in variable costs. The new method will require;$18,000 in training costs and $120,000 in annual equipment costs. Management is;willing to adjust the budget for an amount up to the cost of the new equipment.;The budgeted production level is 150,000 units. Appraisal costs for the year;are budgeted at $600,000. The new prevention procedures will save appraisal;costs of $30,000. Internal failure costs average $15 per failed unit of;finished goods. The internal failure rate is expected to be 3% of all completed;items. The proposed changes will cut the internal failure rate by one-third.;Internal failure units are destroyed. External failure costs average $54 per;failed unit. The company's average external failures average 3% of units sold.;The new proposal will reduce this rate by 50%. Assume all units produced are;sold and there are no ending inventories.;How much will appraisal costs;change assuming the new prevention methods reduce material failures by 40% in;the appraisal phase? (Points: 3);$60,000 increase;$12,000 decrease;$30,000 decrease;$240,000 decrease;6. (TCO 12) Which of the following is NOT a major feature of a;just-in-time production system? (Points: 3);Workers are trained to be multi-skilled.;Emphasis is placed on increasing setup time and manufacturing lead;time.;Production is organized in manufacturing cells.;Total quality management is aggressively pursued.;7. (TCO 12) Obsolescence is an example of which cost category? (Points;3);Ordering costs;Carrying costs;Labor costs;Quality costs;8. (TCO 12) The economic order quantity ignores (Points: 3);purchasing costs.;relevant ordering costs.;stockout costs.;Both 1 and 3 are correct;9. (TCO 12) When using a vendor-managed inventory system to enhance the;features of supply-chain management, a challenging issue is (Points: 3);problems of communication and trust.;the sharing of accurate, timely, and relevant information about sales;forecasts.;potentially incompatible information systems.;All of the above;10. (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags.;The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is;$1.60, and the cost to initiate a production;run is $50. There are no flag displays on hand but Liberty had scheduled 60 equal production runs of the display;sets for the coming year, the first of which is to be run immediately. Liberty;Celebrations has 250 business days per;year. Assume that sales occur uniformly throughout the year and that;production is instantaneous.;If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the;flag displays for the coming year is (Points: 3);$2,667;$2,000;$1,600.;$1,333.
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