2.99 See Answer

Question: 17. In 2023, a manufacturing company instituted

17. In 2023, a manufacturing company instituted a total quality management (TQM) program producing the comparative report shown below:
17. In 2023, a manufacturing company instituted a total quality management (TQM) program producing the comparative report shown below:


On the basis of this report, which one of the following statements is most likely correct?
a. An increase in conformance costs resulted in a higher-quality product and, therefore, a decrease
in nonconformance costs.
b. An increase in inspection costs was solely responsible for the decrease in quality costs.
c. Quality costs such as scrap and rework decreased by 48%.
d. Quality costs such as returns and repairs under warranty decreased by 40%.
e. Nonconformance costs increased by 50% and conformance costs decreased by approximately 47%.

On the basis of this report, which one of the following statements is most likely correct? a. An increase in conformance costs resulted in a higher-quality product and, therefore, a decrease in nonconformance costs. b. An increase in inspection costs was solely responsible for the decrease in quality costs. c. Quality costs such as scrap and rework decreased by 48%. d. Quality costs such as returns and repairs under warranty decreased by 40%. e. Nonconformance costs increased by 50% and conformance costs decreased by approximately 47%.


> Sticky Fingers Inc. produces packing and masking tape. Last year’s annual report has been compiled, and you are in charge of business analysis for the year. The company had a goal for inventory turnover of 6 for last year. The actual results were cost of

> Assume the following for Round Top Inc. for the current fiscal year. Round Top applies overhead on the basis of units produced. Budgeted overhead ……………………………………. $350,000 Actual overhead ……………………………………….. $360,000 Actual labor hours ………………………………………… 22,

> Johnson Healthcare is a health care firm specializing in products for persons who are disabled. Johnson plans to maintain a 10% gross profit margin. After analyzing last year’s data, you found that Johnson had gross profit of $250,000 and net sales of $1

> Smith Co. is a firm specializing in financial advice for retired individuals. After some analysis, you have determined that an earnings multiplier of 7 is appropriate for this type of business. Smith’s most recent earnings totaled $250,000, and earnings

> Moore Heel is a shoe manufacturing company. Moore has hired you to value the company based on the discounted cash flow method. You have determined that the present value of the company’s cash flows is $400,000, marketable securities total $150,000, and t

> Jamison Auto Parts produces replacement parts for automobiles. Last year, Jamison had EVA® net income of $200,000, cost of capital of 10%, and EVA® capital of $750,000. Determine the firm’s economic value added (to the nearest whole dollar).

> From a tax avoidance viewpoint, the best type of compensation is: a. Salary: current deduction for firm and currently taxed to employee. b. Deferred bonus: deferred tax for company, deferred deduction to employee. c. Dividends: never taxed to firm or to

> Which of the following is not one of the three key objectives of management compensation? a. To motivate managers to work hard. b. To reduce the taxes of the firm and the employee. c. To provide an incentive for managers to make decisions that are in the

> Felton Co. produces rubber bands for commercial and home use. Felton reported $1 million residual income (RI) with $20 million net book value (NBV) of assets and $5 million in operating income for the year. What was the required rate of return?

> Tinsley Plastics manufactures plastic bottles used for beverages and household cleaners. The average net book value (NBV) of assets during the quarter is estimated as $500,000. If the required rate of return is 10% on average assets and the firm wants to

> Foreman Publishing Company’s income for the most recent quarter was $500,000, and the average net book value (NBV) of assets during the quarter was $1.5 million. If the company has a required rate of return of 15% on investment, what was the residual inc

> Using the data from Brief Exercise 19-16, compute King Mattresses’s total return on sales (ROS) for the quarter. Brief Exercise 19-16: King Mattresses sells both mattress sets and bed frames. Last quarter, total sales were $50,000 for mattress sets and

> Assume the following for White Top Inc. for the current fiscal year. White Top applies overhead on the basis of units produced. Budgeted overhead ………………………………………..… $200,000 Actual overhead ………………………………………………. $222,000 Actual labor hours ………………………………………

> King Mattresses sells both mattress sets and bed frames. Last quarter, total sales were $50,000 for mattress sets and $25,000 for bed frames. Return on investment (ROI) was 10% for both divisions, while asset turnover (AT) was 5 for mattress sets and 2 f

> Moore Money is a financial services firm specializing in fixed-income investments. You have been asked by the accounting manager to analyze the company’s financial data from the last quarter. You find the firm had return on investment (ROI) of 15% and as

> Matthews Produce harvests and sells Florida oranges. Matthews has hired you to determine its return on investment (ROI) based on both net book value (NBV) and gross book value (GBV). Financial data for the company show that profits are $2 million, the NB

> Scott Healthcare provides a walk-in clinic for its patients and a pharmacy for any medication prescribed by the doctor. Last year, Scott generated total sales of $500,000 and $100,000 in profits. Scott also had average assets of $250,000 for the year. Wh

> Williams Manufacturing uses scrap metal to produce various tools, such as drill bits, hammer heads, saw blades, and nails. The CEO has asked you to analyze the saw blades division to determine asset turnover for last quarter. You find that the saw blades

> Smith Branded Apparel designs T-shirts for businesses and corporations. The accounting manager has presented the latest quarter’s return on sales of 10% and asset turnover of 1.5. What is the company’s current return on investment (ROI)?

> Meargia Plastics is evaluating its plastic bottles division. The accounting manager has come up with the following data for the year: contribution margin of $500,000, controllable fixed costs of $200,000, and noncontrollable fixed costs of $50,000. Requ

> Manuel Inc. produces textiles in many different forms. After recording lower-than-anticipated profits last year, Manuel has decided to shut down one of its divisions that is not performing well. The accounting manager has compiled the following data on t

> Phelps Glass Inc. has reported the following financial data: net revenues of $10 million, variable costs of $5 million, controllable fixed costs of $2 million, noncontrollable fixed costs of $1 million, and nontraceable costs of $500,000. Required: 1. W

> Calabria Healthcare supplies prescription drugs to pharmacies. As the management accountant, you are required to analyze the financial statements for this quarter. You already have analyzed the company’s two divisions, Name Brand and Generic, and your su

> Some firms pool overhead into a single plantwide overhead pool, while others accumulate overhead costs into manufacturing departments, each of which has an overhead cost pool and overhead cost application rate. Which approach is likely to provide more ac

> Pepper’s Automotive (see Brief Exercise 18-19) has further analyzed the exhaust system division into three products: exhaust pipes, intake valves, and intake pipes. The income statement is available below. Required: 1. What would be t

> Pepper’s Automotive produces auto parts for various automotive retailers. Pepper’s is evaluating the exhaust system division of the company and has come up with the following data for the year: net revenues are $1,000,000, variable costs are $300,000, an

> Colleen Stevens is the North Carolina senior account manager for a national medical equipment manufacturer. Colleen has overall responsibility for the Southeast sales division. The division employs approximately eight sales representatives. Colleen’s rep

> An internationally known food processing company has acquired a mineral mining company. The decision to acquire the mining company is considered strategic based on the anticipated growing demand for the minerals used to create the packages for the compan

> Which of the following is a primary motivation for using a value-stream income statement? a. To measure the financial benefits of a firm’s progress in implementing lean manufacturing b. To identify the existence of poor-quality outputs or processes c. To

> A cause-and-effect (i.e, “fish-bone” or “Ishikawa”) diagram is most helpful for which of the following? a. Estimating nonlinear cost functions b. Diagnostic purposes (i.e., guiding corrective action once poor-quality outputs have been determined) c. Dete

> Part of the process of managing and controlling quality consists of detecting poor quality and then taking appropriate corrective action. Which of the following is not a mechanism that management would typically use to detect poor quality outputs? a. His

> Which of the following is not a characteristic of nonfinancial performance quality indicators? a. They relate to physical processes and therefore focus attention on precise problem areas in need of attention. b. They can provide immediate feedback on whe

> Total customer-response time (CRT) can be defined as which of the following? (Hint: Refer to text Exhibit 14.14 and the accompanying discussion.) a. The difference between when a customer’s order is set up and when the order is finished b. The elapsed ti

> Which of the following costs is not a desirable characteristic of a COQ reporting system? a. Exclusion of opportunity costs in the COQ report b. Comparison of quality costs to some baseline amount for the period c. Use of activity-based cost data to esti

> If the overhead rate is $10 per machine hour and there are 20 labor hours, 16 machine hours, and two personnel on the job, how much overhead should be applied to the job?

> Which of the following costs is not properly characterized as an external failure cost under a COQ reporting system? a. Sales returns and allowances b. Lost contribution due to increased demand on constrained resources c. Lost sales and customer ill-will

> Which of the following costs is not properly characterized as a prevention cost under a COQ reporting system? a. Quality training costs b. Supplier assurance costs c. Testing and inspection costs d. Equipment maintenance costs

> Which of the following statements regarding cost of quality (COQ) reporting is correct? a. Total COQ consists of conformance costs plus nonconformance costs. b. Total COQ consists of conformance costs plus appraisal costs. c. A typical COQ report include

> A Taguchi quality loss function (QLF) a. is used to define the tolerance range in the goalpost quality approach to setting quality standards. b. predicts decreasing quality-related costs as deviations from targeted quality increases. c. would show a doub

> Which of the following is a distinguishing characteristic of using absolute quality conformance for setting quality expectations? a. The ability to incorporate Taguchi quality loss functions b. The use of the DMAIC (define, measure, analyze, improve, and

> Which of the following is a distinguishing characteristic of using goalpost conformance for setting quality expectations? a. The use of Six Sigma performance standards b. The use of the DMAIC (define, measure, analyze, improve, and control) problem-solvi

> “Total perceived quality” (i.e., total customer satisfaction with a product or service) can be defined as the difference between a. “design specifications” and “customer expectations.” b. “customer expectations” and “performance quality.” c. “performance

> Which of the following would not be a desirable outcome from an organization’s investments in quality? a. An increase in the sales return rate b. A decrease in warranty and service-related costs c. Higher product/service selling prices d. Reduced manufac

> Which of the following would not typically be associated with improved quality of a manufacturer’s output? a. Reduced manufacturing cost b. Higher levels of inventory holdings c. Faster throughput times d. Higher selling prices and increased revenues

> For a typical order, assume the following times (in hours): storage time (in between processes), 5.0; inspection time, 1.0; move time (from process to process), 2.0; and manufacturing (processing) time, 8.0. Given this information, what is the manufactur

> Nieto Machine Shop budgeted 4,000 labor hours and 8,000 machine hours used in May. Total budgeted overhead for May is $80,000. What is the overhead rate using labor hours and also using machine hours? Which would you pick and why?

> On average, the manufacturing (processing) time spent per order is approximately 4 days. In addition, a typical order spends 4 days moving from process to process, 3 days in storage, and 2 days in inspection. For an average order, what is the manufacturi

> A customer places an order on January 1. Ten days later, that order is received by the manufacturing department. Fifteen days later, the order is put into production. Processing (manufacturing) time is 20 days for this order. The completed order is then

> A customer’s order is delivered (received by the customer) on December 1, 2022. This order was placed with the company on September 1, 2022, and received by the manufacturing department on September 15, 2022. Actual production on the order began on Octob

> Listed below are selected items from the cost of quality (COQ) report for Watson Products for last month: Category …………………………………………. Amount Rework ……………………………………………….. $ 725 Equipment maintenance ……………………….. 1,154 Product testing ………………………………………. 786 Fi

> Refer to the information in Brief Exercise 17-13. What is the expected average loss (cost) per unit, E(L(x)), based on a Taguchi quality loss function (QLF), if the manufacturing process is centered on the target specification with a standard deviation (

> Refer to the information in Brief Exercise 17-13. Calculate the estimated total quality loss (cost) when the measured quality characteristic, x (e.g., circumference, measured in inches), is 78. Round your answer to the nearest whole number. Brief Exerci

> Solidtronic Inc., an original equipment manufacturer (OEM), has a product specification of 75 ± 5 (i.e., T [the target value] = 75). The cost for warranty services (when the quality characteristic, x, is either 70 or 80) is estimated as $500 per unit. Wh

> Assume that a plasma TV company is working at a 3-sigma level of quality in terms of each of 100 component parts in each TV it manufactures. Because of the high price associated with these TV sets, the company defines a product defect as any unit with on

> Use the following information. McCall sells a gold-plated souvenir mug; McCall expects to sell 1,600 units for $45 each to earn a $25 contribution margin per unit. Janice McCall, president, expects the year’s total market to be 32,000 units. For the year

> A small consulting firm has an overhead rate of 200% of direct labor charged to each job. The materials cost (including travel and other direct costs) for a particular job is $10,000, and the direct labor is $20,000. What is the total job cost for this j

> Use the following information. McCall sells a gold-plated souvenir mug; McCall expects to sell 1,600 units for $45 each to earn a $25 contribution margin per unit. Janice McCall, president, expects the year’s total market to be 32,000 units. For the year

> Use the following information. McCall sells a gold-plated souvenir mug; McCall expects to sell 1,600 units for $45 each to earn a $25 contribution margin per unit. Janice McCall, president, expects the year’s total market to be 32,000 units. For the year

> Use the following information. CompuWorld sells two products, R66 and R100, and calculates sales variances using the contribution margin. Pertinent data for the current year follow: What is the R66 sales quantity variance?

> Use the following information. CompuWorld sells two products, R66 and R100, and calculates sales variances using the contribution margin. Pertinent data for the current year follow: What is the total sales volume variance?

> Use the following information. CompuWorld sells two products, R66 and R100, and calculates sales variances using the contribution margin. Pertinent data for the current year follow: What is the R100 sales mix variance?

> Darwin Inc. provided the following information: Budgeted production …………………….. 10,000 units Actual production ………………………..…. 9,500 units Budgeted input ……………………………. 9,750 gallons Actual input …………………………………. 8,950 gallons What is the partial operational

> Refer to the journal entries made in Brief Exercise 15-22. Provide an appropriate end-of-year closing entry for each of the following two independent situations: (a) the net factory overhead cost variance is closed entirely to Cost of Goods Sold (COGS)

> Refer to the variances you calculated in conjunction with Brief Exercise 15-21 and to the information in Brief Exercises 15-16 and 15-18. Prepare the appropriate journal entries to record (a) actual factory overhead costs for the year, (b) the applied

> Refer to the information in Brief Exercise 15-16. Calculate and label the following factory overhead variances for the year: (a) total overhead cost variance, (b) total flexible budget variance, and (c) production volume variance. Round each answer to

> As an extension of Brief Exercise 15-19, assume that at the end of the year, management of Patel and Sons decides that the overhead cost variances should be allocated to WIP Inventory, Finished Goods Inventory, and Cost of Goods Sold (COGS) using the fol

> Montross Lumber processes wood to be shipped to construction companies. In order to keep their products uniform, they conduct inspections on 20% of the boards produced. Inspections cost the company $10 per hour and it takes one minute to inspect each boa

> Refer to your answers to Brief Exercises 15-16 and 15-17 and the journal entries made in conjunction with Brief Exercise 15-18. Given this information, provide the appropriate journal entries (a) to record the overhead cost variances for the period (the

> Refer to the data in Brief Exercise 15-16. Provide the correct summary journal entries for actual and applied factory overhead costs (both variable and fixed) for the year. Assume that the company uses a single account, Factory Overhead, to record both a

> Refer to the data in Brief Exercise 15-16. Given this information, what was (a) the variable overhead spending variance for the year and (b) the variable overhead efficiency variance for the year? Round answers to the nearest whole dollar; indicate whe

> Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 50,000 machine hours per year, which represents 25,000 units of output. Annual budgeted fixed factory overhe

> Baxter Corporation’s master budget calls for the production of 5,000 units per month and $144,000 indirect labor costs for the year. Baxter considers indirect labor as a component of variable factory overhead cost. During April, the company produced 4,50

> Sipple Furniture’s master budget for the year includes $360,000 for fixed supervisory salaries. Practical capacity, which is used to set the fixed overhead allocation rate, is 500 units per month. Supervisory salaries are expected to be incurred uniforml

> Refer to the data in Brief Exercise 14-21. (a) What was the direct labor rate variance for the month, rounded to 2 decimal places? (b) Was this variance favorable or unfavorable? Brief Exercise 14-21: Mom’s Apple Pie Company uses a standard cost syst

> Mom’s Apple Pie Company uses a standard cost system. The standard direct labor time for each pie is 10 minutes. During the most recent month, the company produced and sold 6,000 pies. The standard direct labor rate is $8 per hour; the actual labor rate p

> Refer to Exhibit 14.8 and the accompanying discussion in the text. Demonstrate that the flexible budget variance for PVC during October 2022 was $1,680F. Exhibit 14.8:

> Refer to Exhibit 14.8 and the accompanying discussion in the text. Demonstrate that the purchase price variance for PVC during October 2022 was $720U. Exhibit 14.8:

> Tasty Beverage Co. produces soft drinks, specializing in fruit drinks. They produce 5,000 cans of product per batch. Setup cost for each batch is $50 and each drink costs $0.10 to produce. What is the total cost per batch? How much would it cost to fill

> Refer to Exhibit 14.8 and the accompanying discussion in the text. Demonstrate that the materials usage variance for PVC during October 2022 was $2,400F. Exhibit 14.8:

> Chapman Inc. sells a single product, Zud, which has a budgeted selling price of $24 per unit and a budgeted variable cost of $12 per unit. Budgeted fixed costs for the year amount to $45,000. Actual sales volume for the year (47,000 units) fell 3,000 uni

> Davidson Corp. produces a single product: fireproof safety deposit boxes for home use. The budget going into the current year anticipated a selling price of $55 per unit. Because of competitive pressures, the company had to cut selling prices by 10% duri

> The Ace Company sells a single product at a budgeted selling price per unit of $20. Budgeted fixed manufacturing costs for the coming period are $10,000, while budgeted fixed marketing expenses for the period are $24,000. Budgeted variable costs per unit

> Edwards and Bell market a single line of home computers, dubbed the XL-98. The master budget for the coming year contained the following items: sales revenue, $400,000; variable costs, $250,000; fixed costs, $100,000. Actual results for the year were as

> The Baldwin Company, in its master budget for 2022, predicted total sales of $160,000, variable costs of $48,000, and fixed costs of $52,000 ($24,000 manufacturing and $28,000 nonmanufacturing). Actual sales revenue for 2022 turned out to be $180,000. Ac

> Why do prices at theme parks in Orlando, Florida, remain high despite seasonal and economic cyclical ups and downs? What type of strategic pricing is used by these theme parks?

> If customer demand is 200,000 units per month, and available manufacturing capacity is 6,000 hours per week, what is the Takt time for this firm?

> Name three professional cost management organizations and explain their roles and objectives.

> What does the term cost management mean? Who in the typical firm or organization is responsible for cost management?

> Give three examples of firms you believe would not be significant users of cost management information and explain why.

> Give four examples of firms you believe would be significant users of cost management information and explain why.

> For the following multiple choice questions, select the best available answer. 28. SWOT analysis is a useful tool for a. evaluating the performance of an organization. b. identifying the organization’s critical success factors. c. developing the organiz

> 26. Management accounting, as defined by the IMA, uses the expertise of the management accountant to a. Improve quality and reduce cost b. Implement a strategy of cost leadership or differentiation c. Implement a tactic of customer value and shareholder

> 21. Direct materials are 22. Which of the following costs would be included in manufacturing overhead for a computer manufacturer? a. The cost of the USB port hardware b. The wages paid to hardware assemblers c. The cost of the circuit boards d. Deprec

> What are the two types of bonus pools for bonus incentive plans? How do they differ, and how does each achieve (or not achieve) the three objectives of management compensation?

> Identify and explain the six financial ratios used to evaluate liquidity as part of the firm’s business analysis.

> List the three bases for bonus incentive plans; explain how they differ and how each achieves (or does not achieve) the three objectives of management compensation.

> If Toyota Motor Company receives an order on May 1, begins production on May 19, and ships the order on May 20 immediately following production, then what is the manufacturing cycle efficiency (MCE) ratio?

> From a tax planning standpoint, what form of compensation is least desirable for the manager? For the firm?

> From a financial reporting standpoint, what form of compensation is most desirable for the firm?

> Explain how management compensation can provide an incentive to unethical behavior. What methods can be used to reduce the chance of unethical activities resulting from compensation plans?

2.99

See Answer