Question :
31)
Appraisal costs include all of the following EXCEPT 31)
______ A)
inspection. : 1196147
31)
Appraisal costs include all of the following EXCEPT 31)
______ A)
inspection. B)
process inspection. C)
product testing. D)
spoilage. E)
none of the above
32)
External failure costs include all of the following EXCEPT 32)
______ A)
liability claims. B)
transportation costs. C)
scrap. D)
customer support. E)
none of the above
33)
Which of the following DOES NOT pertain to control charts? 33)
______ A)
They plot each observation relative to specified ranges that represent the expected distribution, but only those observations outside specified limits. B)
They plot a series of successive observations of a particular step, procedure, or operation. C)
They are used in statistical quality control. D)
They plot each observation relative to specified ranges that represent the expected distribution. E)
They plot only those observations outside specified limits.
34)
When using a control chart, a manager does not investigate the activity when 34)
______ A)
most observations are within the range of 2 standard deviations. B)
all observations are determined to be non-random. C)
most observations are outside the preset range. D)
all observations are within the range of preset standard deviations. E)
all observations are outside the preset range.
35)
Which of the following indicates how frequently each type of failure occurs? 35)
______ A)
control chart B)
frequency chart C)
cause-and-effect diagram D)
Pareto diagram E)
both frequency charts and Pareto diagrams
Use the information below to answer the following question(s).
Capital Manufacturing expects to spend $200,000 in 20×2 in appraisal costs if it does not change its incoming materials inspection method. If it decides to implement a new receiving method it will save $20,000 in fixed appraisal costs and variable costs of $0.20 per item. The new method involves $30,000 in training costs and an additional $80,000 in annual equipment rental. It takes two units of material for each finished product.
Internal failure costs average $40 per failed unit of finished goods. During 20×1, 10 percent of all completed items had to be reworked. External failure costs average $100 per failed unit. The company’s average external failures are 2 percent of units sold. The company carries no ending inventories, because all jobs are on a per order basis and a just-in-time inventory ordering method is used.
36)
What is the net affect on appraisal costs for 20×2 assuming the new receiving method is implemented and that 400,000 material units are received? 36)
______ A)
$10,000 decrease B)
$115,000 decrease C)
$110,000 increase D)
$100,000 decrease E)
$10,000 increase
37)
How much will internal failure costs change assuming 400,000 units of materials are received and that the new receiving method reduces the amount of unacceptable product units in the manufacturing process by 20 percent? 37)
______ A)
$160,000 decrease B)
$50,000 decrease C)
$10,000 increase D)
$320,000 decrease E)
$500,000 decrease
38)
How much will external failure costs change assuming 400,000 units of materials are received and that the product failures with customers are cut in half with the new receiving method? 38)
______ A)
$500,000 decrease B)
$200,000 decrease C)
$320,000 decrease D)
$10,000 increase E)
$400,000 decrease
Use the information below to answer the following question(s).
Imperial Products has a budget of $600,000 in 20×1 for prevention costs. If it decides to automate a portion of its prevention activities it will save $40,000 in variable costs. The new method will require $12,000 in training costs and $80,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budget includes a production level of 100,000 units.
Appraisal costs for the year are budgeted at $400,000. The new prevention procedures will save appraisal costs of $20,000. Internal failure costs average $10 per failed unit of finished goods. The internal failure rate is expected to be 2 percent of all completed items. The proposed changes will cut the internal failure rate in half. Internal failure units are destroyed. External failure costs average $36 per failed unit. The company’s average external failures average 2 percent of units sold. The new proposal will reduce this rate by 80 percent.
39)
What is the net change in the budget of prevention costs if the procedures are automated in 20×2? Will management agree with the changes? 39)
______ A)
$40,000 decrease, yes B)
$52,000 increase, no C)
$52,000 increase, yes D)
$92,000 increase, no E)
$92,000 decrease, yes
40)
How much will appraisal costs change assuming the new prevention methods reduce the amount of material failures during the appraisal phase by 40 percent? 40)
______ A)
$7,450 decrease B)
$20,000 decrease C)
$8,000 decrease D)
$160,000 decrease E)
$40,000 increase
