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2. Which of the following assesses the productivity efficiency for all inputs combined in order to 8. An advantage of partial measures of productivity is that it:
value change in productivity? A. allows managers to focus on the use of a particular input.
A. partial productivity measurement C. profit-linked productivity measurement B. is a complex measure that is difficult to interpret by everyone in the organization.
B. profile productivity measurement D. total productivity measurement C. looks at the effect of multiple inputs.
D. is a perfect measure of performance.
3. Changes in the productivity of different types of resources are NOT always:
A. measurable and observable Total quality management
B. in the same direction or at an equal pace 9. Characteristics of total quality management include:
C. unique and differentiated A. focusing on customer satisfaction
D. simultaneous and positive B. striving on continuous improvement
C. involvement of the entire work force
4. How can productivity be improved? D. All of the above are characteristics of TQM
A. using less input to produce the same output
B. using the same input to produce more output 10. Which of the following is not an important principle of TQM?
C. improve input trade-off efficiency by using a less costly mix of inputs A. The organization should focus on improving goods from the consumer's viewpoint
D. all of the above B. Everyone in the organization is required to participate
C. There should be a system of planning, controlling, and decision making
5. One major problem in measuring productivity in not-for-profit organizations is the absence of D. Complacency is the norm
revenue as the:
A. common measure for inputs 11. Total quality management directs management attention to the relationship between the
B. common measure for outputs internal production/service process and the:
C. basis for financial reporting A. CEO of the competition C. activity analysis
D. common denominator with commercial firms B. ultimate customer D. control charts
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Cost Accounting Systems
(D. Product Quality and Productivity/ Total Quality Management)
Value chain
13. Which of the following describes the zero defects view? 19. Which of the following is the correct sequence of the value chain?
A. it permits a predetermined level of defective units to be produced A. design, research and development, production, supply, marketing, customer service,
B. it is the level where the number of defects allowed minimizes total cost. distribution
C. it is the level where there are no defects. B. research and development, design, supply, production, marketing, distribution, customer
D. all of the above. service
C. research and development, design, supply, production, marketing, customer service,
Statistical process control distribution
14. A technique by which companies analyze fluctuations in a process is called: D. supply, research and development, design, production, marketing, distribution, customer
A. statistical process control C. benchmarking service
B. a quality audit D. Pareto analysis
Process value analysis
Process benchmarking 20. A tool that focuses on manufacturing processes and seeks to reduce or optimize the activities
15. Focusing on how best in class companies achieve their results is referred to as: performed within the process is
A. reverse engineering C. process benchmarking A. process value analysis C. caveat analysis
B. results benchmarking D. competitive benchmarking B. re-engineering D. benchmarking
Total quality control 21. A tool that compares how tasks are performed internally with the best practices of industry
16. The goal of total quality control is leaders is
A. to have less defective material than good material A. process value analysis C. caveat analysis
B . to permit defects as long as they do not exceed a certain level B. re-engineering D. benchmarking
C. to have zero defect
D. both b and c 22. Attempting to determine why activities are performed and how well they are performed is a
goal of
Cost of Quality Report A. process value analysis
17. Regardless of the differences in form and control, a common feature that should be present in B. both traditional and activity-based costing systems
any Cost of Quality Report is that the report: C. computer-integrated manufacturing systems
A. promotes total quality management (TQM) D. just-in-time manufacturing
B. stratifies costs by product line
C. stratifies costs by plant Process Re-engineering
D. stratifies costs by division 23. An approach to developing new ways to perform existing activities is called
A. process value analysis C. caveat analysis
Value Engineering B. re-engineering D. benchmarking
18. Value engineering can result in
A. product redesign C. modifications in process methods 24. A danger in Process Reengineering is that:
B. changes in materials specifications D. all of the above A. non-value-9added activities may be eliminated.
B. some resources may no longer be required.
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Cost Accounting Systems
(D. Product Quality and Productivity/ Total Quality Management)
30. The costs of reworking defective units to make them saleable are classified as Productivity-linked increase in gross profit
ii
A. appraisal costs C. internal failure costs . At the end of 2006, Duabi Corporation implemented a new labor process and
B. external failure costs D. prevention costs redesigned its product with the expectation that input usage efficiency would
increase. Now, at the end of 2007, the president of the company wants an assessment
External failure cost of the changes on the company's productivity. The data needed for the assessment are
31. Which of the following represents an external failure cost? as follows:
A. reprocessing a defective product before shipment 2006 2007
B. replacing a defective product after shipment Output 30,000 38,000
C. hiring for quality Output prices P12 P12
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Cost Accounting Systems
(D. Product Quality and Productivity/ Total Quality Management)
60
i
. Answer: B
Labor productivity ratios are operational measure (100,000/20,000 = 5 motors per hour) or financial measure [(25 *
100,000)/(20,000 * 10) = P12.50).
ii
. Answer: B
Material productivity ratio, 2006: (30,000 ÷ 10,000) 3
Actual materials (lbs), 2007 10,400
Required lbs. based on 2006: (38,000 ÷ 3) 12,667
Savings in number of pounds 2,267
Material productivity-linked to profit: (2,267 x P7) P15,870
iii
. Answer: A
Price recovery component:
Change in Profits: P10,700
Deduct profit-linked productivity change 7,600
Price recovery component P 3,100
iv
. Answer: D
Testing P60,000
Customer surveys 15,000
Total appraisal costs P75,000
v
. Answer: B
Product liability insurance P35,000
Warranty repairs 50,000
Total external costs P85,000
vi
. Answer: B
Current quality costs P293,000
Less proposed quality costs: (0.025 x P1M) 25,000
Cost savings (increase in profits) P268,000