66. In __________, the plant is organized into areas where all machines used to manufacture a
group of similar products are close to each other. a. a process layout b. a product layout c. cellular manufacturing d. just-in-time production
67.
Characteristics of cellular manufacturing include: a. a layout that is usually circular like a cell
b. increasing the number of employees needed to produce a product
c. individual areas for employees so each can work independently without interruption d. a flexible layout that can be easily adjusted to make a different product
68. The theory of constraints: a. emphasizes long-term optimization b. maintains that maximizing volume through production bottlenecks will increase
operating income
c. helps managers make special one-time decisions d. suggests that some component parts should be outsourced
69. Constraints may include: a. the availability of direct materials in manufacturing b. linear square feet of display space for a retailer c. direct labor in the service industry d. All of the above are correct.
THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 70 THROUGH 74.
Braun’s Brakes manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply:
Model X Selling price $50 Direct materials 6 Direct labor ($12 per hour) 12 Variable support costs ($4 per machine-hour) 4 Fixed support costs 10 Which model has the greatest contribution margin per unit? a. Model X b. Model Y c. Model Z
d. both Models X and Y
Model Y $60 6 12 8 10 Model Z $70 6 24 8 10
70.
71.
Which model has the greatest contribution margin per machine-hour? a. Model X b. Model Y c. Model Z
d. both Models Y and Z
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72.
If there is excess capacity, which model is the most profitable to produce? a. Model X b. Model Y c. Model Z
d. both Models X and Y
If there is a machine breakdown, which model is the most profitable to produce? a. Model X b. Model Y c. Model Z
d. both Models Y and Z
How can Lisa Braun encourage her salespeople to promote the more profitable model? a. Put all sales persons on salary.
b. Provide higher sales commissions for higher priced items.
c. Provide higher sales commissions for items with the greatest contribution margin per
constrained resource.
d. Both (b) and (c) are correct.
High levels of inventory result in all EXCEPT: a. high moving, handling, and storage costs b. increased product obsolescence and damage c. increased financing costs d. idle facilities
The implementation of just-in-time production results in all of the following EXCEPT: a. decreased cycle times b. reduced amount of waste c. a slower pace for employees d. structural changes
Characteristics of just-in-time manufacturing include all of the following EXCEPT: a. the ability to process items in large batches
b. making a product only when the customer requires it c. no work-in-process inventories
d. a problem anywhere can stop production
73.
74.
75.
76.
77.
78. Measures of JIT (just-in-time) manufacturing reliability include all of the following
EXCEPT: a. defect rates b. labor and machine utilization ratios c. cycle times d. percent of on-time deliveries
79.
Of the four quality costing categories, the most damaging category to the organization is: a. prevention costs b. appraisal costs
c. internal failure costs d. external failure costs
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80. __________ are incurred when a defective component is discovered before shipment to the
customer. a. Prevention costs b. Appraisal costs c. Internal failure costs d. External failure costs
81. _________ are incurred when a customer discovers a defect. a. Prevention costs b. Appraisal costs c. Internal failure costs d. External failure costs
82.
Training employees in methods to maintain quality is an example of __________. a. prevention costs b. appraisal costs
c. internal failure costs d. external failure costs
__________ include the cost of raw-materials inspections and assembly-line inspections. a. Prevention costs b. Appraisal costs
c. Internal failure costs d. External failure costs
83.
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THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 84 THROUGH 88.
Umberger Manufacturing, Inc., is considering reorganizing its plant into manufacturing cells. The following estimates have been prepared to evaluate the benefits from the reorganization: Before the change After the change Total annual sales $600,000 $800,000 Costs as a percentage of sales: Direct materials 23% 20% Direct labor 9% 7% Support costs 18% 13% Work-in-process inventory $125,000 $ 90,000 Inventory carrying costs are estimated to be 10% per year.
84. As a result of the layout reorganization, reduced levels of work-in-process inventory are
projected to decrease inventory carrying costs by: a. $12,500 b. $ 9,000 c. $ 6,000 d. $ 3,500
85. As a result of the layout reorganization, incremental manufacturing costs are projected to: a. increase by $84,000 b. increase by $20,000 c. decrease by $20,000 d. decrease by $16,500
86. As a result of switching to a cellular manufacturing operation, total benefits are projected to
increase by: a. $216,500 b. $200,000 c. $183,500 d. $176,500
87. After the change, a decreased amount of work-in-process inventory is projected because: a. of reduced cycle times resulting from a more continuous production flow b. of lower financing costs and the reduced need for storage and handling c. larger batches can be processed faster and more efficiently d. All of the above are correct.
88. After the change, direct labor costs as a percentage of sales are projected to decrease
because: a. less work-in-process inventory needs to be moved from location to location b. fewer employees are needed to produce a product due to the new work design c. less supervisors are needed to oversee operations d. All of the above are correct.
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THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 89 THROUGH 93.
Vander Belt Manufacturing, Inc., is considering reorganizing its plant into manufacturing cells. The following estimates have been prepared to evaluate the benefits from the reorganization: Before the change After the change Total annual sales $500,000 $750,000 Costs as percentage of sales: Direct materials 20% 17% Direct labor 8% 7% Support costs 12% 6% Work-in-process inventory $100,000 $ 80,000 Inventory carrying costs are estimated to be 11% per year.
89. As a result of the layout reorganization, reduced levels of work-in-process inventory are
projected to decrease inventory carrying costs by: a. $ 2,200 b. $ 7,500 c. $ 8,800 d. $11,000
90. As a result of the layout reorganization, incremental manufacturing costs are projected to: a. decrease by $22,800 b. decrease by $25,000 c. increase by $25,000 d. increase by $40,000
91. As a result of switching to a cellular manufacturing operation, total benefits are projected to
increase by: a. $222,800 b. $227,200 c. $272,800 d. $277,200
92. After the change, sales are projected to increase because: a. of shorter delivery lead times b. of higher sales prices c. of the ability to process larger batch sizes d. All of the above are correct.
93. After the change, work-in-process carrying costs are projected to decrease because of: a. reduced costs in materials handling b. lower financing costs c. the decreased need for inventory storage d. All of the above are correct.
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