1. Strategic cost management's the identification of strotegies te develop © competitive advantage 2, Strategic decision making is importent to echieve geod inventery control, FALSE 2. The objective of stretegic cost menegementis to reduce costs while strengthening strategic positions. TRUE 4, There ere two generel cost management strtegies: cost leadership ond focusing FALSE 5. Velue-chein enelysi is identifying end exploiting intemal end external linkages to achieve strong strategic postions, TRUE 6. Exploiting internal linkages involves the eazezement of management reliability FALSE 7. Exploiting supplier linkages is the exploitation of firm's internal activities, FALSE 8. Expliting custemer linkages is not important zinge customers de not effectprofitability FALSE 5. Strategic cost management emphasizes the importance of en external focus end the need to recognize end exploit intemal and external linkages. TRUE 10. Life-cycle cost management involves two types of lfe-cyele viewpsints: the Aackeing vewpomt and ire production viewpéiee TRUE 12. Target costing provides « methed for reducing costs by exploiting customer and supplier linkages. TRUE 12 Life-cycle costs are viewpoint. FALSE costs essociated with # product during the production 13. JIT manufacturing eliminates waste by producing products only when f and in the Quantities needed TRUE 1a In JT purchasinglf materials are usually at warehouse long before they are needed 15. A major difference between treditionsl and JiT environments is the degree of responsibility given to workers in the orgenization. TRUE. Accey yuality level (AQL) allows ‘occur within a 26, Acceptable quality level (AQL allows defects to thin predetermined 17. In 8 JIT environmenti= many overhead costs are directly traceable to products TRUE 19. The structure for # JIT environment iz # vastly complicated process costing system. FALSE13. Accounting is simplified in the JIT system by the use of beckflush costing. TRUE 20. In @ job-order setting using JIT# repetitive business is seperated from unique orders. shernative stretegies that provide long-term growth involves, Gecision making. strategic 122. The creation of customer value for seme or lower cost then competitors is celled edventege compstitive 123. the difference between what the customer receives end gives up is the customer value enslyzis relies on identifying and exploiting internal end extemal haa Se 8 125. The ezsignments to suppliers end customers thet provide the best cost information needed ore celled ssignments. activity-bazed or de of customers iz called the 126. The length of time © product serves the life. consumable 28. The manufacturing system focuzed on reducing inventory levels and weste is celled manufacturing. just-inctime or just intime or JIT29. In traditional and JIT environments using direct tracingff the manufacturing costs assigned to products are the direct materials costs and the costs. direct labor 30. Accounting for the cost accounting cycle ina JIT environment is simplified by using costing. backflush 31. The strategy which involves choosing among alternative strategies with the goal of selecting a strategy or strategies that provides a company with reasonable assurance of long-term growth and survival is called: A. Competitive advantage®. Strategic cost management€. Strategic decision making D. Customer valus 32. The strategy to create better customer value for the same or lower cost than competitors or creating equivaient value for lower cost than offered by competitors is called: A. Strategic decision makingB. Competitive advantage C. Strategic cost managementD. Total product 33. A competitive advantage has been established when A. customers see the variation as important and the value addes to the customer exceeds the cost of providing differentiation.2. a high-cost strategy increases customer value by minimizing customer sacrifices.C. a low-profit item is dropped from the product line.O. both a and b. 24. The difference between what a customer receives and what the customer gives up is called: A. Customer value B. Strategic cost management. Compatitive advantage D. Strategic decision making 35, The total product the complete range of benefits that a customer receives from a purchased product include(s); A. intangible benefits 0. activityc. tangible benefits D. both aand ¢ 36. The use of cost data to develop and identify superior strategies that will produce a sustainable competitive advantage is called: A. Strategic decision making. Compettive advantageC, Strategic cost management D. Customer value37. When a computer company maintains the intemal storage space for a lower priceff it is following a A. focusing strategy.B. cost leadership strategy.C. differentiation strategy. D. strategie positioning strategy. 38. When a computer company increases the internal storage space for the same priceff itis following a A. focusing strategy.©. low-cost strategy.C. differentiation strategy. D. strategic positioning strategy. 39. When a computer company targets customers in the Southff itis following a A. focusing strategy.8. low-cost strategy.c. differentiation strategy.0. strategic allocation strategy. 40. When a computer company selects @ mix of strategies in order to create sustainable competitive advantagsfF it is following a A. focusing strategy.®. low-cost strategy. C. differentiation strategy.D. strategic positioning strategy. 41. The relationships among activities that are performed with a firm's portion of the value chain isiare) called: A. Internal inkages &. External linkages. Industral value chaind. Both a an 42. The industrial value-chain analysis A. recognizes only complex linkages within the firm.8. is not compatible with differentiation strategies.C. determines a linked set of value-creating activities.D. requires a firm to operate across the entire value chain. 43. The factor(s) that describe the relationships of a firm's value chain activities that are performed with its suppliers and customers is(are) called: A. Internal linkagesB. Extemal linkages C. Industrial value chainD. Both a and b44. When a computer manufacturing company addresses supplier production problemsff itis focusing on A, external linkages.S. intemal linkages.C. a differentiation strategy.D. a cost leadership strategy. 45. The structural and executional factors that determine the long-term cost structure of an organization are called: A. Organizational activities®. Operational cost drivers "Operational activitiesD. Organizational cost drivers 46, Structural and executional activities are types of A. organizatioral activities. B. operating activities. JI7.9. both a and b. 47. 8uilding plantsff management structuningff and grouping employees are examples of A, executional activities.B, structural activities.c. operational activities.0. both a and b, 48. The factors that drive the cost of day-to-day activities performed as a result of the structure and processes selected by the organization are called: A. Organizational activitiesS. Organizational cost drivers. Operational cost drivers D. Operational activities 49. plant layoutff quality management systems and providing capacity are examples of Be executional wcautied & atricturdl scion’. operational sctentioeD. both a and b. 50, The operational activity of moving inventory s classified as a A untlevel activity. B, batch-level activity.c. product-level activity.0. facility-level activity. 51 The operational activity of setting up equipmentis classified as a A. unit-level activity.B. batch-level activity.C. product-level activity.D. facility-level activity.52, The operational activity of assembling parts is an example of a A. unit-level activity. 8. batch-level activity.C. product-level activity.D. facilitylevel activity. 53, The operational activity of redesigning products is classified as a A. unit-level activity. 8. batch-level activity.C. product-level activity.D. facility-level activity, 54. The operational activity of inspecting is classified as a A. unit-level activity.B. batch- level activity.C. product-level activity.D. facility-level activity. 55. Activities required to designff developff produceff marketff distributeff and service a product are known as A. whole life activities.B. value-chain activities.c. target activities. D. overhead. 56. The first link of the internal value chain is A. design.5. develop.C. market. D. distribute. 57. The last link of the internal value chain is A. design.B. service.C. market.D. distribute, 58. Analyzing how costs and other financial factors vary as different bundles of activities are considered to strengthen a firm's strategic position is the process of A. exploiting linkages.®8. design.c. cost driver analysis.0. distribution 59. The industry value chain includes A. shareholder value chain activities aswell as firm activities.B. buyer and supplier value chain activities aswell as firm activities.C. only firm activities.O. only firm production activities. 60. Identifying profitable and unprofitable customers is an example of exploiting A. Supplier linkages.®. the product life cycle.c. consumable life.D. customer linkages.61. Figure 11-1Ambrosia Corp. is a manufacturer of equipment used in manufacturing. It currently produces a product with 30 parts but through redesign has reduced the number of parts to 9. Then current activity capacity and demand for the 30 unit configuration and expected activity demand for the 9 part configuration are provided below: Activitie | Activity | Acti s Driver |Capacit |Current |Expecte y Activity |d Demand | Activity Demand Materials [number | 300ff000 | 300ff000) 90ff000 usage of parts Assembly [direct [20ff000 | 20ff000 | 6ff000 labor hours Purchasin [number |20ff000 | 16f000 | 8f000 gparts __|of orders Materials usage has a rate of $6 per part and no fixed costs. Assembly has a rate of $20 per labor hour with no fixed component. Purchasing requires clerks that can process 5ff000 purchase orders. Each clerk earns $40ff000 per year. There is also a $1 per order processing cost. Refer to Figure 11-1. What is the savings in materials usage cost with the new design changes? A. $252ff0008. $480ff000 €. $1ffZ60fO00D. $1ff800FF00062. Figure 11-1Ambrosia Corp. is a manufacturer of equipment used in manufacturing. It currently produces a product with 30 parts but through redesign has reduced the number of parts to 9. Then current activity capacity and demand for the 30 unit configuration and expected activity demand for the 9 part configuration are provided below. Activitie [Activity [Activity s Driver |Capacit |Current |Expecte y Activity | Demand |Activity Demand Materials [number |300ff000 | 300f000| 90ff000 usage _|of parts Assembly [direct | 20ff000 | 20ff000 | 6ff000 labor hours Purchasin [number |20#000 | 16ff000 | 8ff000 gparts __|of orders Materials usage has a rate of $6 per part and no fixed costs Assembly has a rate of $20 per labor hour with no fixed component. Purchasing requires clerks that can process 5ff000 purchase orders. Each clerk eams $40ff000 per year. There is also a $1 per order processing cost. Refer to Figure 11-1. What is the cost savings from purchasing parts? A. $80ff000B. $88ff000 C. $48ff000D. $40ff00063. Figure 11-1Ambrosia Corp. is a manufacturer of equipment used in manufacturing. It currently produces a product with 30 parts but through redesign has reduced the number of parts to 9. Then current activity capacity and demand for the 30 unit configuration and expected activity demand for the 9 part configuration are provided below: Activitie | Activity | Activity s Driver |Capacit |Current | Expecte y Activity |d Demand | Activity Demand Materials [number |300ff000 | 300ff000| 90ff000 usage _|of parts Assembly | direct [20ff000 | 20ff000 | 6ffooo labor hours Purchasin [number |20f000 | 16ff000 | 8ff000 gparts _|of orders Materials usage has a rate of $6 per part and no fixed costs. Assembly has a rate of $20 per labor hour with no fixed component. Purchasing requires clerks that can process 5ff000 purchase orders. Each clerk earns $40ff000 per year. There is also a $1 per order processing cost. Refer to Figure 11-1. What is the total cost reduction of the new design? A. $2ff208ff000 8. $2ff194f000C. $1ff628f000 D. $1f624100064. Figure 11-1Ambrosia Corp. is a manufacturer of equipment used in manufacturing. It currently produces a product with 30 parts but through redesign has reduced the number of parts to 9. Then current activity capacity and demand for the 30 unit configuration and expected activity demand for the 9 part Configuration are provided below. ‘Activitie [Activity [Activity s Driver |Capacit |Current | Expecte y Activity | Demand | Activity Demand Materials [number |300ff000 | 300f000] 90000 usage _|of parts Assembly | direct [20ff000 | 20ff000 | 6ff000 labor hours Purchasin [number |20ff000 | 16ff000 | 8f000 gparts | of orders Materials usage has a rate of $6 per part and no fixed costs. Assembly has a rate of $20 per labor hour with no fixed component. Purchasing requires clerks that can process 5ff000 purchase orders. Each clerk eams $40ff000 per year. There is also a $1 per order processing cost. Refer to Figure 11-1. If L0ff000 units are being produced and the sales price is $500ff what is the new sales price if the cost savings are passed on to the consumer? A $129 808. $317.40C_ $237.00D. $337.2065. In activity-based costingff supplier costs A. must be narrowerff including only the purchase price.8. are allocated to products arbitrarily.€, include costs of qualityff reliability and timeliness and are assigned to products on a causal basis.D. all of these statements are true. 66. Figure 11-2Blue Vibrance Company sells a product used in many manufacturing processes. The sales activity involves three activity areas: Activity Area Cost Driver and Rate Order taking $100 per purchase order Sales visits $50 per visit Delivery vehicles $1 per delivery mile The following customer information is given: AX BY DZ Units sold 100ff000 __80ff000 60ff000 List price $50 $50 $50 Actual sales $45 $48 $50 price Number of 30 20 10 purchase orders Number of 6 5 3 sales visits Number of 100 80 60 delivery miles Refer to Figure 11-2. Which customer is most profitable? A, AX B. BYC. DZD. They are equally profitable.67. Figure 11-2Blue Vibrance Company sells a product used in many manufacturing processes. The sales activity involves three activity areas: Activity Area. Cost Driver and Rate Order taking $100 per purchase order Sales visits $50 per visit Delivery vehicles $1 per delivery mile The following customer information is given: AX BY DZ Units sold | 100ff000 80000 60ff000 List price $50 $50 $50 Actual sales $45 $48 $50 price Number of 30 20 10 purchase orders Number of 6 5 3 sales visits Number of 100 80 60 delivery miles Refer to Figure 11-2. Which customer has the least activity costs? A. AX8. BYE. DZD. They are the same.68. Figure 11-2Blue Vibrance Company sells a product used in many manufacturing processes. The sales activity involves three activity areas: Activit ea Cost Driver and Rate Order taking $100 per purchase order Sales visits $50 per visit Delivery vehicles $1 per delivery mile The following customer information is given: AX BY DZ Units sold 100ff000 8 0ff000 60ff000 list price $50 $50 $50 Actual sales $45 $48 $50 price Number of 30 20 10 purchase orders Number of 6 5 3 sales visits Number of — 100 80 60 delivery miles Refer to Figure 11-2. What is the profitability of customer BY? A. $4ff000ff0008. $3ff840fQQ0C. $3ff837Ff6 70D. $2f330f00069. Which of the following are true about total quality control? A. Total quality control is an approach to differentiate and reduce overall quality costs.B. Total quality control demands production of defect-free products.C. Total quslity control links suppliers closely with the firm.D. All of these statements are true about total quality control. 70. Figure 11-3Awesome Products Company manufactures a product sold to retailers. It is considering suppliers for its process. The supplier quality involves four activity areas: Activity Area. Cost Driver and Rate Order cast $120 per purchase order Defective units $200 per unit internal failure costs Delivery trips $5 per delivery mile Carrying cost $1 per order The following supplier information is given: x3 2 421 Materials 100ff000 =» 100ff000-~—=—«L00 F000 units needed Actual $5 $4.99 $5.01 purchase price Number of | 20 30 18 purchase orders Number of 6 12 oOdefects. Number of | 20 30 18 deliveries Refer to Figure 11-3. Which supplier is least costly? A. X3B. Y2 ©. Z1D. They are equally costly. 71. Figure 11-3Awesome Products Company manufactures a product sold to retailers. It is considering suppliers for its process. The supplier quality involves four activity areas: Activity Area Cost Driver and Rate Order cost $120 per purchase order Defective units $200 per unit internal failure costs Delivery trips $5 per delivery mile Carrying cost $1 per order The following supplier information is given: x3 2 41 Materials 100ff000-~—-100ff000-~—«100f000 units needed Actual $5 $4.99 $5.01 purchase price Number of — 20 30 18 purchase orders Number of 6 12 0 defects Number of — 20 30 18 deliveries Refer to Figure 11-3. Which supplier has the most defactive units? A. X3B, Y2C. Z1D. They are equal.72. Figure 11-3Awesome Products Company manufactures a product sold to retailers. It is considering suppliers for its process. The supplier quality involves four activity areas: Acl Area Cost Driver and Rate Order cost $120 per purchase order Defective units $200 per unit internal failure costs Delivery trips $5 per delivery mile Carrying cost $1 per order The following supplier information is given: x3 ww 41 Materials 100/000 ~~ 100ff000 «1 00ff000 units needed Actual $5 $4.99 $5.01 purchase price Number of | 20 30 18 purchase orders Number of 6 12 0 defects Number of 20 30 18 deliveries Refer to Figure 11-3. What is the cost of supplier Z1? A. $503ff358 B. $503ff268 C. $501ff000D. $499ff000 73. The length of time that a product serves the needs of customers is called the: A. Product life cycleB. Revenue producing lifeC. Introduction stageD. Consumable life74. The time a product exists—from conception to abandonment is called the: A. Revenue producing lifeB. Product life cycle C. Consumable lifeD. Introduction stage 75. The stage during which the product loses market acceptance is called the: A. decline stage 8. growth stageC. maturity stage D. introduction stage 76. The period of time when sales increase at a decreasing rate is called the: A. introduction stageB. growth stageC. decline stage D. maturity stage 77. The stage characterized by preproduction and startup activities is called the: A. maturity stage8. growth stage C. introduction stage D. decline stage 78. The period of time when sales increase at an increasing rate is called the: A. introduction stage. maturity stage€, growth stage D. decline stage 79. The viewpoint that describes the general sales pattem of a product as it passes through the introductionff growthff maturityff and decline stages is called the: A. Marketing viewpoint 8. Customer viewpointC. Production viewpointD. Accounting viewpoint80. The viewpoint which defines stages of the life cycle by changes in the type of activities performed is called the: A. Accounting viewpointB. Production viewpoint C. Customer viewpointD. Marketing viewpoint 81. Which stage in the marketing viewpoint is characterized by preproduction and startup activities? A. declineB. introduction C. growthD. maturity 82. Which of the following is NOT a stage of the marketing viewpoint of the product life cycle? A. declineB. growthC. maturity D. production 83. Which of the following is NOT a stage of the consumable life- cycle viewpoint? A. disposalB. maintaining, logistics. purchasing 84. Life-cycle cost management consists of A. actions taken to enable a product to be designedff developedff producedff marketedff distributedff operatedff maintainedff servicedff and disposed of in order to maximize profits.8. actions to extend the life of a product through designff developmentif productionff and maintenance. C. actions that focus on minimizing the cost of developingff designingff producingff distributingff operatingff servicingif and disposal of a product.D. actions taken to designff developff testff marketff distributeff maintainff serviceff and dispose of a product to maximize revenues.85. Which of the following is NOT a stage of the production life- cycle viewpoint? A. designB. introductionC. researchD. testing 86. Which of the life-cycle viewpoints is the revenue-oriented viewpoint? A. consumable life-cycle viewpoint8. production viewpoint, marketing viewpointD. planning viewpoint 87. Which of the following is NOT a stage of the production life- cycle viewpoint? A. planningB. production. purchasingD. logistics 88. Which of the life-cycle viewpoints is the cost-oriented viewpoint? A. product life-cycle 8. consumable life-cycle © production life-cycleD. planning life-cycle 89. Which viewpoint of the product life-cycle is customer-value oriented? A. production life-cycle 8. marketing life-cycle €. consumable life-cycleD. planning life-cycle 90. Which stage of the marketing life-cycle has slow sales growth with peak sales? A. introductionB. growth€, maturityD. decline91. At which stage of the consumable life-cycle is price sensitivity low? A, introductions. growthc. maturityD. decline 92. According to the authorsff 90 percent or more of a product's life-cycle costs are determined during A. growth stage. B. development stage.C. decline stage.D. maturity stage. 93. Information for life-cycle cost management is supported by a(n) A. functional-based costing system.B, activity-based costing system.C. normal costing system.D. all of these. 94. Life-cycle cost management emphasizes A. cost control.B. cost reduction.C. normal costing.D. process costing. 95. The difference between the sales price needed to capture a predetermined market share and the desired profit per unit is called: A. Gross profit. Target marketC. Target priceD. Target cost96. Figure 11-4the Algonquin Company developed the following budgeted life-cycle income statement for two proposed products. Each product's life cycle is expected to be two years. ProductA Product B Total sales $280ff000 $200ff000 _ $480ff000 Cost of 200ff000 _130ff000 __ 330ff000 goods sold Gross profit $ 80ff000 $ 70ff000 $150ff000 Period expenses: Research (70ff000) and developmen t Marketin (50ff000) 9g Life-cycle $ 30ff000 income A 10 percent return on sales is required for new products. Because the proposed products did not have a 10 percent return on salesff the products were going to be dropped.Relative to Product Bif Product A requires more research and development costs but fewer resources to market the product. Sixty percent of the research and development costs are traceable to Product Aff and 30 percent of the marketing costs are traceable to Product A. Refer to Figure 11-4. If research and development costs and marketing costs are traced to each productff life-cycle income for Product A would be A. $15ff000.B. $23ff000.C. $27ff000.D. $38ff000.97. Figure 11-4the Algonquin Company developed the following budgeted life-cycle income statement for two proposed products. Each product's life cycle is expected to be two years. Product | Product B otal Sales $280f1000 $200ff000 _ $480ff000 Cost of 200ff000 130ff000 330ff000 goods sold Gross profit $ 80ff000 $ 70ff000 $150ff000 Period expenses: Research (70ff000) and developmen t Marketin -(50ff000) g Life-cycle $ 3011000 income A 10 percent return on sales is required for new products. Because the proposed products did not have a 10 percent return on salesff the products were going to be dropped.Relative to Product Bf Product A requires more research and development costs but fewer resources to market the product. Sixty percent of the research and development costs are traceable to Product Aff and 30 percent of the marketing costs are traceable to Product A. Refer to figure 11-4. If research and development costs and marketing costs are traced to each productff life-cycle income for Product B would be A. $35ff000.B. $7ff000. C. $12ff000.D. $20ff000.98. Figure 11-4the Algonquin Company developed the following budgeted life-cycle income statement for two proposed products. Each product's life cycle is expected to be two years. Product A Product B Total Sales $280ff000 $200ff000 $48 0ff000 Cost of 200ff000 _130ff000 ___330ff000 goods sold Gross profit $ 80ff000 __$ 70ff000 __$150ff000 Period expenses: Research (70ff000) and developmen t Marketin -(50ff000) g Life-cycle $ 30ff000 income A 10 percent retum on sales is required for new products. Because the proposed products did not have a 10 percent return on salesff the products were going to be dropped.Relative to Product Bff Product A requires more research and development costs but fewer resources to market the product. Sixty percent of the research and development costs are traceable to Product Aff and 30 percent of the marketing costs are traceable to Product A. Refer to Figure 11-4. Return on sales for Product A would be A. 40.0%. B.25.0%.C. 8.2%.D. 2.5%.99. Lavalier Company developed the following budgeted life-cycle income statement for two proposed products. Each product's life cycle is expected to be two years. Product AA | Product BB Total Sales $400ff000 $350ff000 —_ $750ff000 Cost of 300ff000 = _200ff000 = __500ff000 goods sold Gross profit $100ff000 $150ff000 $250ff000 Period expenses: Research (LOOf000) and developmen t Marketin '75ff000) g Life-cycle $ 751f000 income A 12 percent return on sales is required for new products. Because the proposed products did not have a 12 percent return on salesff the products were going to be dropped Relative to Product BBff Product AA requires more research and development costs but fewer resources to market the product. Sixty-five percent of the research and development costs are traceable to Product AA‘f and 40 percent of the marketing costs are traceable to Product AA.If research and development costs and marketing costs are traced to each productf life-cycle income for Product AA would be A. $3ff000. B. $100ff000.C. $35ff000.D. $5ff000.100. Lavalier Company developed the following budgeted life- cycle income statement for two proposed products. Each product's life cycle is expected to be two years. Product AA Product BB Total Sales $400ff000 $350ff000 _ $750ff000 Cost of -300ff000 = =©_200ff000 =__S00ff000 goods sold Gross profit $100ff000 _$150ff000 —$250ff000 Period expenses: Research (100ff000) and developmen t Marketin 75ff000) g Life-cycle 75ff000 income A 12 percent return on sales is required for new products. Because the proposed products did not have a 12 percent return on salesff the products were going to be dropped. Relative to Product BBff Product AA requires more research and development costs but fewer resources to market the product. Sixty-five percent of the research and development costs are traceable to Product AAff and 40 percent of the marketing costs are traceable to Product AA.If research and development costs and marketing costs are traced to each productff life-cycle income for Product BB would be A. $70ff000.8. $90ff000.C. $105ff000.0. $150ff000.101. Luminous Company sells a product for $450 per unit. Its market share is 25 percent. The marketing manager feels that the market share can be increased to 33 percent with a reduction in price to $390. The product is currently eaming a profit of $72 per unit. The president of Luminous Company feels that the $72 profit per unit must be maintained. What is the target price per unit? A. $3788. $450C. $318D, $390 102. Luminous Company sells a product for $450 per unit, Its market share is 25 percent. The marketing manager feels that the market share can be increased to 33 percent with a reduction in price to $390. The product is currently eaming a profit of $72 per unit. The president of Luminous Company feels that the $72 profit per unit must be maintained. What is the original cost per unit? A. $3008. $450€, $378 D. $318 103. Dot Company sells a product for $225 per unit. Its market share is 20 percent. The marketing manager feels that the market share can be increased to 30 percent with a reduction in price to $195. The product is currently eaming a profit of $36 per unit. The president of Dot Company feels that the $36 profit per unit must be maintained. What is the target price per unit? A. $195 6. $225 C. $189D. $159104. Dot Company sells a product for $225 per unit. Its market share is 20 percent. The marketing manager feels that the market share can be increased to 30 percent with a reduction in price to $195. The product is currently earning a profit of $36 per unit. The president of Dot Company feels that the $36 profit per unit must be maintained. What is the original cost per unit? A. $2255. $195 C.$159D. $189 105. Dot Company sells a product for $225 per unit. Its market share is 20 percent. The marketing manager feels that the market share can be increased to 30 percent with a reduction in price to $195. The product is currently earning a profit of $36 per unit. The president of Dot Company feels that the $36 profit per unit must be maintained. What is the target cost per unit? A. $159 B. $195. C.$189D. $225 106, The manufacturing which reduces inventory levels because production is geared to demand is called: A. Traditional B. Conventional. ExtraordinaryD, JIT 107. Traditional manufacturing uses which of the following philosophies of quality control? A. zero defects8. total quality control€, acceptable quality levelD. both a and b108. Which of the following is a trait of a traditional manufacturing system? A, push-through systemB. value-chain focusC. total quality controlD. high employee involvement 109. Which of the following is NOT a trait of a traditional manufacturing system? A. push-through systemB. short-term supplier contractsC. value-added focusD. total quality control 110. Which of the following is a trait of a JIT system? A. push- through systeme. significant inventory€. buyers' market. large supplier base 111. JIT manufacturing differs from traditional manufacturing in all of the following ways EXCEPT A, the treatment of direct materials and direct labor for product costing.B. the level of inventories. C. the approach to quality control.D. the physical layout of the manufacturing process. 112. JIT manufacturing uses which of the following philosophies of quality control? A. just-in-case (JIC)B. acceptable quality level (AQLIE. total quality control (TQC)D. both a and c 113. Which of the following is NOT a trait of a JIT system? A. acceptable quality level. long-term contractsC. multi-skilledlaborD. high employee involvement 114. The goal of total quality control is A. to have less defective material than good material.8. to permit defects as long as they do not exceed a certain level.C, to have zero defects.D. both b and c. 115. The approach to quality control which attempts to achieve zero defects is called: A. traditional B. acceptable quality level C. total quality controlD. marginal control 116. the traditional approach of permitting defects to occur as long as they do NOT exceed a certain level is called A. Total quality control3. Zero defects€. Acceptable quality level D. Both a and c 117. If traditional manufacturing is usedff which of the following is considered direct costs? A. setup costsB. direct labor C. maintenance of machineryD. inspection costs 118. In a JIT manufacturing environmentff product-costing information is used mainly for all of the following EXCEPT A, product costing of inventory for financial reporting purposes. B. pricing decisions.C. product profitability analysis.D. make-or-buy decisions.119. Which of the following manufacturing costs is assigned to products in a traditional environment using direct tracing? A. supervisionB. materialsC. repairs and maintenanceD. energy 120. Which of the following manufacturing costs is assigned to products in a traditional and JIT environment using direct tracing? A, direct materials. direct laborC. operating supplies, both a and b 121. If JIT manufacturing is used and each manufacturing cell produces a single productff which of the following is considered a direct product cost? A. inspection costs8. materialsC. setup costs D. all of these 122. If JIT manufacturing is used and each manufacturing cell produces a single productff all of the following are considered direct product costs EXCEPT A. overtime wages for cell workers.B. the salary of the plant supervisor.c. the salary of the cell supervisor. D. all of these. 123. Which of the following manufacturing costs is assigned to products in a traditional and JIT environment using allocation? A. insurance and taxes®. direct labor. supervision (department) D. custodial services124. Which of the following manufacturing costs is assigned to products in JIT environment using direct tracing? A. material handlingB. repairs and maintenanceC. custodial servicesD. all of these 125. Which of the following manufacturing costs is assigned to products in a traditional environment using driver tracing? A. direct labor®. direct materials. energyD. insurance 126. Which of the following manufacturing costs is assigned to products in a JIT environment using allocation? A. cafeteria servicest. equipment depreciation€. insurance and taxes D. operating supplies127. Prior to installing a JIT systemff Grindstone Company used machine hours to assign maintenance costs to its three products of 4-inchff 6-inchff and 9-inch insulation. The maintenance costs totaled $432ff000 per year. The machine hours used by each product and the quantity produced of each product are as follows: Machine Hours Quantity Produced 4-inch 5ff000 15ff000 rolls 6-inch 12ff000 12ff500 rolls 9-inch 7ff000 11ff200 rolls After installing JITff three manufacturing cells were created and the cell workers were trained to perform maintenance. Maintenance costs for the three cells still totaled $432ff000; howeverff these costs are now traceable to each cell Celiff 4-inch $125ff000 Celiff 6-inch 175ff000 Celiff 9-inch 165000 The maintenance cost per roll of 4-inch insulation before JIT is installed would be A. $11.25.B. $6.00. C. $7.75.D. $3.00.128. Prior to installing a JIT systemff Grindstone Company used machine hours to assign maintenance costs to its three products of 4-inchff 6-inchff and 9-inch insulation. The maintenance costs totaled $432ff000 per year. The machine hours used by each product and the quantity produced of each product aré as follows: Machine Hours | Quantity Produced 4-inch 5ff000 15ff000 rolls 6-inch 12ff000 127500 rolls 9-inch 7#f000 117200 rolls After installing JITf three manufacturing cells were created and the cell workers were trained to perform maintenance. Maintenance costs for the three cells still totaled $432ff000; howeverff these costs are now traceable to each cell Cellff 4-inch $125ff000 Cellff 6-inch 175ff000 Cellff 9-inch 165ff000 The maintenance cost per roll of 9-inch insulation before JIT is installed would be A. $7.75.B. $11.25.C. $14.00.D. $30.00.129. Prior to installing a JIT system#t Grindstone Company used machine hours to assign maintenance costs to its three products of 4-inchff 6-inchff and 9-inch insulation. The maintenance costs totaled $432ff000 per year. The machine hours used by each product and the quantity produced of each product are as follows: Machine Hours Produced 4-inch 5ff000 15ff000 rolls 6-inch 12ff000 12ff500 rolls 9-inch 7f1000 11ff200 rolls After installing JITff three manufacturing cells were created and the cell workers were trained to perform maintenance. Maintenance costs for the three cells still totaled $432ff000; howeverff these costs are now traceable to each cell. Cellff 4-inch $125ff000 Cellff 6-inch 175ff000 Cellff 9-inch 165ff000 After installing JIT the maintenance cost per roll of 6-inch insulation is A. $8.67.8. $12.85.€. $14.00. D. $17.00.130. A firm that has implemented JIT had the following transactions: 1. Materials were purchased on account for $40ff000. 2. Materials were placed into production. 3. Actual direct labor costs were $6ff000. 4. Actual overhead costs were $40ff000. 5. Conversion costs applied were $42ff000. 6. All work was completed for the month. 7. All completed work was sold. 8. The variance is recognized. What will be the entry to record material purchases using the traditional approach? A. Materials and In Process inventory 40ff000 Accounts Payable 40ff000 B. Materials Inventory 40ff000 = Accounts Payable A0FfF000C. Accounts Payable 40ff000 — Materials and In Process Inventory 40ff000D. Accounts Payable 40ff000 = Materials Inventory 40ff000