Question 1

Justin Company recently purchased materials from a new supplier at a very attractive price.The materials were found to be of poor quality,and the company's laborers struggled significantly as they shaped the materials into finished product.In a desperation move to make up for some of the time lost,the manufacturing supervisor brought in more-senior employees from another part of the plant.Which of the following variances would have a high probability of arising from this situation?
A)Material price variance,favorable.
B)Material quantity variance,unfavorable.
C)Labor rate variance,unfavorable.
D)Labor efficiency variance,unfavorable.
E)All of thesE.

Accepted Answer

The answer of Justin Company recently purchased materials from a...

Question 2

The manufacturing cycle efficiency for PQR Company when the processing time is six hours and inspection,waiting,and move time are one hour each is:
A)0.67.
B)0.75.
C)0.78.
D)0.88.
E)an amount other than those shown abovE.

Accepted Answer

Manufacturing Cycle Efficiency (MCE) is calculated as the ratio of value-added time (processing time) to total cycle time. Total cycle time is the sum of processing, inspection, waiting, and move times. Here, MCE = 6 / (6 + 1 + 1 + 1) = 6 / 9 = 0.67.

Question 3

A direct-labor efficiency variance cannot be caused by:
A)inexperienced employees.
B)poor quality raw materials.
C)employee inefficiency.
D)an out-of-date labor time standarD.
E)producing fewer finished units than originally planned.

Accepted Answer

Producing fewer finished units than originally planned affects the volume of production, not the efficiency of labor used in production. Efficiency variance is concerned with the amount of labor time used versus the standard time expected for the actual output.

Question 4

Standard costs:
A)allow a manager to assess the efficiency of operations.
B)allow a company to practice management by exception.
C)provide management with a basis for performance evaluations.
D)if set correctly,can provide a motivational tool for employees.
E)All of the above

Accepted Answer

Standard costs provide a variety of benefits, including allowing managers to assess efficiency, practicing management by exception, providing a basis for performance evaluations, and serving as a motivational tool for employees. Therefore, all of the above options are correct.

Question 5

The typical balanced scorecard is best described as containing:
A)financial performance measures.
B)nonfinancial performance measures.
C)neither financial nor nonfinancial performance measures.
D)both financial and nonfinancial performance measures.
E)either financial or nonfinancial performance measures but not both.
Two correct answers!
"D" is also a correct answer,albeit not as thorough.(See your own T/F question #5).

Accepted Answer

The best choice is D because the typical balanced scorecard contains both financial and nonfinancial performance measures. While A and B are partially correct, they are not sufficient as the question asks for the typical balanced scorecard which includes both types of measures. C and E are incorrect as they do not include both types of measures.

Question 6

To assess how customers perceive a company's products,management may study:
A)the number of customer complaints.
B)the number of warranty claims.
C)the number of products returned.
D)the cost of repairing returned products.
E)All of these measures.

Accepted Answer

To get a comprehensive and accurate understanding of how customers perceive a company's products, it is essential to consider all of these measures. The number of customer complaints, warranty claims, and returned products can indicate the extent of dissatisfaction or issues with the products. The cost of repairing returned products can also provide insights into product quality or design problems. Overall, analyzing all of these measures can help management identify areas that need improvement and make more informed decisions to enhance customer experience and satisfaction.

Question 7

Lead indicators guide management to:
A)take actions now that will have positive effects on organizational performance now.
B)take actions now that will have positive effects on organizational performance in the future.
C)take actions in the future that will have positive effects on organizational performance now.
D)take actions in the past that will have positive effects on organizational performance in the future.
E)pursue identical strategies as those implemented with lag indicators.

Accepted Answer

Lead indicators are used to predict future outcomes and guide management to take actions now that will have positive effects on organizational performance in the future.

Question 8

When using a balanced scorecard,a company's market share is typically classified as an element of the firm's:
A)financial performance measures.
B)customer performance measures.
C)learning and growth performance measures.
D)internal-operations performance measures.
E)interdisciplinary performance measures.

Accepted Answer

Market share is typically classified as an element of the customer performance measures in a balanced scorecard. This is because it reflects how well the company is meeting the needs and expectations of its customers in a specific market.

Question 9

Listed below are five variances (and possible causes)that are under review by management of Knox Company.Which of the following is least likely to cause the variance indicated?
A)The need to ship goods acquired from a distant supplier via FedEx rather than via truck;material price variance.
B)The need to complete goods on a timely basis during a period of high absenteeism;labor rate variance.
C)A work-team that is very unhappy with its supervisor;labor efficiency variance.
D)The need to close a plant for two days because of blizzard conditions;material quantity variance,part no.542.
E)A malfunctioning piece of manufacturing equipment;labor efficiency variancE.

Accepted Answer

Closing a plant due to blizzard conditions would not have a direct impact on a material quantity variance for a specific part. The other options directly relate to the variances mentioned.

Question 10

An increasingly popular approach that integrates financial and customer performance measures with measures in the areas of internal operations and learning and growth is known as:
A)the integrated performance measurement tool (IPMT).
B)the balanced scorecard.
C)gain sharing.
D)cycle efficiency.
E)overall quality assessment (OQA).

Accepted Answer

The approach that integrates financial and customer performance measures with measures in the areas of internal operations and learning and growth is known as the balanced scorecard. It is a strategic management tool that allows organizations to align their activities with their strategy and vision, and to monitor their performance across multiple dimensions. The balanced scorecard typically includes financial measures (such as revenue growth, profitability, and return on investment), customer measures (such as customer satisfaction and loyalty), internal process measures (such as cycle time, waste reduction, and quality improvement), and learning and growth measures (such as employee skills and knowledge, innovation, and organizational culture).

Question 11

The management philosophy known as theory of constraints is most closely tied to:
A)cash management.
B)contribution margin analysis.
C)job costing systems.
D)standard costing systems.
E)organizational bottlenecks.

Accepted Answer

The theory of constraints management philosophy is focused on identifying and managing organizational bottlenecks that impede efficiency and productivity. It is designed to optimize the flow of resources and identify areas for improvement to achieve maximum output and profitability. Therefore, the correct choice is E, organizational bottlenecks.

Question 12

Rogillo,Inc.had an unfavorable labor efficiency variance and an unfavorable materials quantity variance.Which department might be held accountable for these variances?
A)Purchasing,because bad materials can harm labor efficiency.
B)Production,because inefficient workers may use more materials than allowed.
C)Marketing.
D)Shipping.
E)Both A and/or B are possiblE.

Accepted Answer

Both the purchasing and production department could be held accountable for the unfavorable labor efficiency variance and unfavorable materials quantity variance. Purchasing department could have purchased low-quality materials which affected the productivity of the workers while the production department could have used more materials than required due to inefficiencies in their processes. Therefore, either one or both could be responsible for these variances. Marketing and shipping departments are not directly related to labor and materials costs.

Question 13

A direct-material quantity variance can be caused by all of the following except:
A)improper employee training.
B)changes in sales volume.
C)acquisition of materials that are below standard quality.
D)adjustment problems with machines.
E)disgruntled workers.

Accepted Answer

Changes in sales volume would not directly impact the direct-material quantity variance, as it is focused solely on the difference between the actual amount of material used and the standard amount of material expected to be used. The other options listed could impact the variance, as they could all affect the actual amount of material used in the production process.

Question 14

To improve its manufacturing efficiency,companies should strive toward increasing __________ time as a percentage of processing time + inspection time + waiting time + move time.The blank is:
A)processing time.
B)lead time.
C)waiting time.
D)move time.
E)inspection timE.

Accepted Answer

Increasing processing time as a percentage of the total time (processing, inspection, waiting, and move time) means that more of the total time is being spent on actual value-added activities, thus improving manufacturing efficiency.

Question 15

Which of the following is a criticism of standard costing,as applied to today's manufacturing environment?
A)Standards tend to be relevant for only a short period of time because of shorter product life cycles.
B)Variance information is usually aggregated (i.e. ,combined)rather than associated with a particular batch of goods or a specific product line.
C)Traditional standard costing has a fairly narrow orientation,failing to focus on broader issues such as the overall costs of ownership.
D)Standard costing pays considerable attention to labor cost and labor efficiency,which are becoming a relatively unimportant factor of production.
E)All of these are valid criticisms.

Accepted Answer

All of the given options are valid criticisms of standard costing in today's manufacturing environment. The shorter product life cycles make standards irrelevant quickly, variance information is not associated with specific products or batches, traditional standard costing is narrow-focused, and labor cost and efficiency are becoming less important. Therefore, the correct answer is E.

Question 16

In the calculation of manufacturing cycle efficiency,which of the following activities results in value-added time?
A)Moving.
B)Processing.
C)Inspection.
D)Waiting.
E)All of thesE.

Accepted Answer

Value-added time refers to the time spent on activities that directly contribute to creating the final product or service. Processing is the only activity listed that directly adds value to the product or service being manufactured, so it results in value-added time. Moving, inspection, and waiting do not add value and are considered non-value added time.

Question 17

Cohlsen Corporation has a favorable materials quantity variance.Which department would likely be asked to explain the cause of this variance?
A)Engineering.
B)Purchasing.
C)Production.
D)Marketing.
E)None,because the variance is favorablE.

Accepted Answer

The Production department is typically responsible for the usage of materials, so they would be asked to explain a favorable materials quantity variance.

Question 18

Lucie Corporation's purchasing manager obtained a special price on an aluminum alloy from a new supplier,resulting in a direct-material price variance of $9,500F.The alloy produced more waste than normal,as evidenced by a direct-material quantity variance of $2,000U,and was also difficult to use.This slowed worker efficiency,generating a $2,500U labor efficiency variance.To help remedy the situation,the production manager used senior line employees,which gave rise to a $900U labor rate variance.If overall product quality did not suffer,what variance amount is best used in judging the appropriateness of the purchasing manager's decision to acquire substandard material?
A)$4,100F.
B)$5,000F.
C)$7,000F.
D)$7,500F.
E)$9,500F.

Accepted Answer

The answer of Lucie Corporation's purchasing manager obtained a special...

Question 19

Swedish Cruise Lines (SCL),which operates in a very competitive marketplace,is considering four categories of performance measures: (1)profitability measures,(2)customer-satisfaction measures,(3)efficiency and quality measures,and (4)learning and growth measures.The company assigns one manager to each ship in its fleet to oversee the ship's general operations.If SCL desired to adopt a balanced-scorecard approach,which measures should the firm use in the evaluation of its managers?
A)1.
B)1,2.
C)2,3.
D)1,2,4.
E)1,2,3,4.

Accepted Answer

The answer of Swedish Cruise Lines (SCL),which operates in a...

Question 20

Which of the following would not be a concern of a company that desires to compete in a global manufacturing arena?
A)Number of new products introduced.
B)Manufacturing cycle efficiency.
C)Number of customer complaints.
D)Number of on-time deliveries.
E)All of these would be concerns.

Accepted Answer

All of the choices are concerns of a company that desires to compete in a global manufacturing arena.

Quiz 10: Standard Costing,Operational Performance Measures,and the Balanced Scorecard

The manufacturing cycle efficiency for PQR Company when the processing time is six hours and inspection,waiting,and move time are one hour each is:

A direct-labor efficiency variance cannot be caused by:

Standard costs:

The typical balanced scorecard is best described as containing:

To assess how customers perceive a company's products,management may study:

Lead indicators guide management to:

When using a balanced scorecard,a company's market share is typically classified as an element of the firm's:

Listed below are five variances (and possible causes) that are under review by management of Knox Company.Which of the following is least likely to cause the variance indicated?

An increasingly popular approach that integrates financial and customer performance measures with measures in the areas of internal operations and learning and growth is known as:

The management philosophy known as theory of constraints is most closely tied to:

Rogillo,Inc.had an unfavorable labor efficiency variance and an unfavorable materials quantity variance.Which department might be held accountable for these variances?

A direct-material quantity variance can be caused by all of the following except:

To improve its manufacturing efficiency,companies should strive toward increasing __________ time as a percentage of processing time + inspection time + waiting time + move time.The blank is:

Which of the following is a criticism of standard costing,as applied to today's manufacturing environment?

In the calculation of manufacturing cycle efficiency,which of the following activities results in value-added time?

Cohlsen Corporation has a favorable materials quantity variance.Which department would likely be asked to explain the cause of this variance?

Which of the following would not be a concern of a company that desires to compete in a global manufacturing arena?