ACCT 434 Week 7 – Quality Control Inventory Management – Quiz
1. Question: (TCO 11)The four cost categories in a cost of quality program are
2. Question: (TCO 11) ________ is a formal means ofdistinguishing between random and nonrandom variation in an operatingprocess.
3. Question:(TCO 11) Which of the following is NOT one of the steps in managingbottlenecks under the theory of constraints?
4. Question: (TCO 11)Scrap is an example of
5. Question: (TCO 11) Regal Products has a budget of $900,000 in 20X6 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $60,000 in variable costs. The new method will require $18,000 in training costs and $120,000 in annual equipment costs. Management iswilling to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 150,000 units. Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $30,000. Internal failure costs average $15 per failed unit of finished goods. The internal failure rate is expected to be 3%of all completed items. The proposed changes will cut the internal failure rate by one-third. Internal failure units are destroyed. External failure costs average $54 per failed unit. The company’s average external failuresaverage 3% of units sold. The new proposal will reduce this rate by 50%. Assume all units produced are sold and there are no ending inventories. How much will appraisal costs change assuming the new prevention methods reduce material failures by 40% in the appraisal phase?
6. Question: (TCO 12) Which of the following is NOT a major feature of a just-in-timeproduction system?
7. Question: (TCO 12)Quality costs include
8. Question: (TCO 12) Which of the following statements about theeconomic-order-quantity decision model is FALSE?
9. Question: (TCO 12) When using a vendor-managed inventory system to enhance thefeatures of supply-chain management, a challenging issue is
10. Question: (TCO 12) Liberty Celebrations, Inc., manufactures a line of flags. The annual demand for its flag display is estimated to be 100,000 units. The annual cost of carrying one unit in inventory is $1.60, and the cost to initiate a production run is $40. There are no flag displays on hand butLiberty had scheduled 60 equal production runs of the display sets for the coming year, the first of which is to be run immediately. Liberty Celebrations has 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous.
If Liberty Celebrations does not maintain a safety stock, the estimated total carrying cost for the flag displays for the coming year is
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