Question 1

____________________ is an important first step in value engineering because it identifies critical consumer preferences that will define the product's desired functionality:
A)Consumer analysis.
B)Sales force analysis.
C)Design analysis.
D)R&D analysis.
E)Market place analysis.

Accepted Answer

Consumer analysis is an important step in value engineering because it helps identify critical consumer preferences that will define the product's desired functionality. This allows the engineering team to focus on developing a product that meets the needs and expectations of consumers, resulting in a higher perceived value for the product. The other options, such as sales force analysis, design analysis, R&D analysis, and marketplace analysis, may provide additional insights, but they do not necessarily provide the same level of understanding of consumer preferences and needs.

Question 2

Activity-based costing (ABC) and the theory of constraints (TOC) are viewed as methods that are:
A)Substitutions for one another.
B)Complementary.
C)Auxiliary.
D)Responsive.
E)Parallel.

Accepted Answer

Activity-based costing and the theory of constraints are complementary methods that can be used together to improve the efficiency and profitability of a business. ABC can identify the costs of specific activities or products, while TOC can help identify and eliminate bottlenecks in the production process. Together, they can provide a more comprehensive understanding of the costs and constraints in a business and help managers make more informed decisions.

Question 3

The theory of constraints (TOC) approach is strategically important in dynamic markets because it leads to:
A)A more responsive and flexible manufacturing environment.
B)Better customer relationships.
C)Quicker data accessibility.
D)Faster setup times.

Accepted Answer

The theory of constraints (TOC) approach focuses on identifying and addressing the bottlenecks, or constraints, in a system to improve its overall efficiency and productivity. This results in a more responsive and flexible manufacturing environment, which is important in dynamic markets where customers' demands and preferences can change rapidly. Option B may also be true, as improving overall efficiency and productivity can lead to better customer relationships through improved delivery times and product quality. However, options C and D are not directly related to the benefits of the TOC approach.

Question 4

Many firms choose to achieve target cost through redesign of the product or service because they recognize that design decisions:
A)Are life cycle costs with high downstream costs and benefits.
B)Account for much of the total product life cycle costs.
C)Impact costs at the manufacturing stage of the life cycle.
D)Are critical success factors in most firms.

Accepted Answer

Design decisions have a significant impact on the total product life cycle costs, and redesigning the product or service can help firms achieve their target cost. Option A and C are not entirely accurate, as design decisions also affect the other stages of the life cycle, including distribution, operation, and disposal. Option D is not relevant to the question.

Question 5

During which stage of the sales life cycle of a product do sales continue to increase but at a decreasing rate, and competition tends to focus on cost?
A)Maturity.
B)Decline.
C)Inflation.
D)Growth.
E)Introduction.

Accepted Answer

During the maturity stage of the sales life cycle, sales of the product continue to increase but at a decreasing rate as the market becomes saturated. At this stage, competition tends to focus on cost as differentiation becomes more difficult.

Question 6

Henry Ford was an early pioneer in the use of:
A)the theory of constraints.
B)target costing.
C)life cycle costing.
D)just-in-time manufacturing.

Accepted Answer

The answer of Henry Ford was an early pioneer in...

Question 7

Generally, firms will price a product more competitively at which stages of the product's sales life cycle?
A)Product introduction and Growth.
B)Maturity and Decline.
C)Throughout the cycle.
D)At the end of the life cycle.

Accepted Answer

During the maturity and decline stages of a product's life cycle, competition tends to be higher, and the market is often saturated. To maintain or increase market share, firms may price their products more competitively.

Question 8

Reduced time-to-market, reduced expected service cost, and ease-of-manufacture are critical success factors at which stage of the cost life cycle?
A)R&D.
B)Product planning and scheduling.
C)Product design.
D)Manufacturing.

Accepted Answer

Reduced time-to-market, reduced expected service cost, and ease-of-manufacture are critical success factors in the product design stage of the cost life cycle. During the product design stage, decisions are made that have a significant impact on the cost of manufacturing the product, as well as the product's expected service cost and time-to-market. Therefore, it is crucial to prioritize these factors during this stage to ensure the product's success.

Question 9

Many firms are finding it is difficult to compete successfully on cost leadership or differentiation alone, and they must, in fact, compete on both:
A)Cost and design.
B)Price and functionality.
C)Cost and price.
D)Design and functionality.
E)Cost and functionality.

Accepted Answer

The answer of Many firms are finding it is difficult...

Question 10

The sequence of phases in the product or service's life in the market - from the introduction of the product or service to the growth in sales and finally maturity, decline, and withdrawal from the market is the:
A)Sales life cycle.
B)Target life cycle.
C)Market life cycle.
D)Critical life cycle.
E)Cost life cycle.

Accepted Answer

The answer of The sequence of phases in the product...

Question 11

The sequence of activities within the firm which begins with research and development, followed by design, and manufacturing, marketing/distribution, and customer service is the:
A)Sales life cycle.
B)Target life cycle.
C)Market life cycle.
D)Critical life cycle.
E)Cost life cycle.

Accepted Answer

The answer of The sequence of activities within the firm...

Question 12

Throughput margin is defined as sales less:
A)Direct labor costs.
B)Direct material costs.
C)Direct labor and material costs.
D)Processing costs.
E)Manufacturing costs.

Accepted Answer

The answer of Throughput margin is defined as sales less:
A)Direct...

Question 13

Which one of the following is not one of the five steps in TOC analysis?
A)Identify the binding constraint(s).
B)Determine the most efficient utilization for each binding constraint.
C)Manage the flow through the binding constraint.
D)Identify those responsible for bottlenecks and make adjustments as needed.
E)Redesign the manufacturing process for flexibility and fast throughput.

Accepted Answer

EThe five steps in the Theory of Constraints (TOC) analysis are: 1) Identify the system's constraint(s), 2) Decide how to exploit the system's constraint(s), 3) Subordinate everything else to the above decision, 4) Elevate the system's constraint(s), and 5) If in the previous steps a constraint has been broken, go back to step 1. Options D and E are not part of these steps. Option D focuses on identifying responsible individuals rather than managing constraints, and option E suggests a complete redesign, which is not a step in the TOC process.

Question 14

When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising:
A)Target costing.
B)Life cycle costing.
C)Variable costing.
D)Absorption costing.
E)Competitive costing.

Accepted Answer

This scenario describes the concept of target costing, where a firm sets a desired cost for a product or service based on the competitive market price and desired profit. The firm then works to achieve that cost through various cost-cutting measures, supplier negotiations, and other expense reductions. Life cycle costing, variable costing, absorption costing, and competitive costing do not specifically relate to this scenario.

Question 15

Which of the following is a method of reducing cost by identifying parts in different products that are common and interchangeable?
A)Target costing.
B)Value chain analysis.
C)Concurrent engineering.
D)Group technology.
E)Theory of constraints.

Accepted Answer

Group technology is a method of reducing cost by identifying parts in different products that are common and interchangeable. By grouping similar parts together, organizations can benefit from economies of scale, reduce the need for multiple inventory stock keeping units (SKUs), and increase production efficiency.

Question 16

Concurrent engineering relies on an integrated approach, in which the engineering/design process takes place throughout the cost life cycle using cross-functional teams. Strategically, this concurrent approach should give a firm all of the following except:
A)Flexibility in refining its design.
B)Ability to quickly incorporate customer suggestions.
C)Cost savings because of time saved.
D)More detailed analysis of product functionality.

Accepted Answer

Concurrent engineering is a holistic approach to product development that focuses on designing, producing, and delivering products faster, with higher quality, and at lower cost. By using cross-functional teams and integrating the design, engineering, manufacturing, and marketing processes, concurrent engineering can help firms achieve many benefits including flexibility, responsiveness to customer needs, cost and time savings, and improved quality. However, the one benefit that concurrent engineering may not provide is more detailed analysis of product functionality. This is because the focus of concurrent engineering is more on the overall product design and optimization, rather than on in-depth analysis of specific product features and functions.

Question 17

Which one of the following is true concerning TOC? 
A)Option A
B)Option B
C)Option C
D)Option D
E)Option E

Accepted Answer

The answer of Which one of the following is true...

Question 18

Which of the following are computer-based databases that include comprehensive information about the firm's cost drivers?
A)Cost tables.
B)Cost databases.
C)Cost driver tables.
D)Excel tables.

Accepted Answer

The answer of Which of the following are computer-based databases...

Question 19

The goals of coordinating manufacturing processes, reducing the amount of inventory, and improving overall productivity is particularly important in a:
A)Standard cost system.
B)Just-in-time system.
C)Normal costing system.
D)Activity based costing system.
E)Total quality management system.

Accepted Answer

Coordinating manufacturing processes, reducing inventory, and improving productivity are all key principles of a just-in-time system, which focuses on minimizing waste and maximizing efficiency. A standard cost system, normal costing system, activity-based costing system, and total quality management system may also have similar goals, but they are not necessarily focused specifically on these three objectives.

Question 20

The theory of constraints (TOC) emphasizes which of the following?
A)Developing competitive constraints.
B)Finding and eliminating design constraints.
C)Removing bottlenecks from the production process.
D)Improving overall production efficiency.

Accepted Answer

The theory of constraints (TOC) emphasizes on removing bottlenecks from the production process. It suggests that the efficiency of the entire process can be improved by identifying and removing bottlenecks, which are limiting the flow of output. Therefore, option C is the correct choice. Option A is incorrect as TOC does not focus on developing competitive constraints. Option B is incorrect as it does not emphasis on finding and eliminating design constraints specifically. Option D is incorrect as while improving production efficiency is a part of TOC, it is not the main emphasis.

Quiz 13: Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

____________________ is an important first step in value engineering because it identifies critical consumer preferences that will define the product's desired functionality:

Activity-based costing (ABC) and the theory of constraints (TOC) are viewed as methods that are:

The theory of constraints (TOC) approach is strategically important in dynamic markets because it leads to:

Many firms choose to achieve target cost through redesign of the product or service because they recognize that design decisions:

During which stage of the sales life cycle of a product do sales continue to increase but at a decreasing rate, and competition tends to focus on cost?

Henry Ford was an early pioneer in the use of:

Generally, firms will price a product more competitively at which stages of the product's sales life cycle?

Reduced time-to-market, reduced expected service cost, and ease-of-manufacture are critical success factors at which stage of the cost life cycle?

Many firms are finding it is difficult to compete successfully on cost leadership or differentiation alone, and they must, in fact, compete on both:

The sequence of phases in the product or service's life in the market - from the introduction of the product or service to the growth in sales and finally maturity, decline, and withdrawal from the market is the:

The sequence of activities within the firm which begins with research and development, followed by design, and manufacturing, marketing/distribution, and customer service is the:

Throughput margin is defined as sales less:

Which one of the following is not one of the five steps in TOC analysis?

When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising:

Which of the following is a method of reducing cost by identifying parts in different products that are common and interchangeable?

Concurrent engineering relies on an integrated approach, in which the engineering/design process takes place throughout the cost life cycle using cross-functional teams. Strategically, this concurrent approach should give a firm all of the following except:

Which one of the following is true concerning TOC?

Which of the following are computer-based databases that include comprehensive information about the firm's cost drivers?

The goals of coordinating manufacturing processes, reducing the amount of inventory, and improving overall productivity is particularly important in a:

The theory of constraints (TOC) emphasizes which of the following?