Total quality management-infrastructure of the organization


Question 1: Guido Guitar (GG) planned to sell 280,000 guitars at $400 each but actually sold 250,000 at $425 each. Which of the following is TRUE of GG's sales quantity variances?

a) $12 million U
b) $5.75 million F
c) $5.75 million U
d) $6.25 million U

Question 2: Which if the following statements is FALSE of Total Quality Management (TQM)?

a) TQM is focused on improving product and customer service quality.
b) TQM is expensive to initiate.
c) TQM requires top management support.
d) TQM requires ISO 9000 certification.

Question 3: The _________ perspective of the balanced scorecard focuses on the infrastructure of the organization.

a) financial
b) customer
c) internal business process
d) innovation and learning

Question 4: _________ provides consumer name recognition, which lowers the information cost of introducing new products.

a) Business capital
b) Brand-name capital
c) Marketing capital
d) Pricing capital

Question 5: Budgeted, standard, and actual volume measures differ in terms of when they are _________.

a) dispersed
b) computed
c) managed
d) tracked

Question 6: Cost of quality data for Zach's Zambonis (ZZ) appears below.
                                                      $ thou
Engineering tests at supplier's factory    18
Field testing new product                    12
Inspection cost                                 42
Process re-engineering                        50
Product redesign                                42
Rework                                             45
Sales returns (at cost)                       105
Scrap                                              22
Training employees on a new system     6
Warranty repairs                                60
Waste                                              14

For Zach's Zambonis, which of the following statements is TRUE?

a) Prevention costs are $116,000.
b) Prevention costs are $116,000.
c) Internal failure costs amount to $186,000.
d) External failure cost ZZ $105,000.

Question 7: CarloffCremes (CC) planned to sell 40,000 Queen size at $20 each and 20,000 King size at $15 each. Actual sales of the former were 45,000 and 25,000 of the latter, at $19 and $16 respectively. Which of the following is TRUE of CC's sales mix variance?

a) $0
b) $175,000 F
c) $28,333 F
d) $8,333 U

Question 8: Which of the following is TRUE?

a) Budgeted fixed factory overheads = Budgeted overheads per unit × actual volume
b) Budgeted fixed factory overheads = Budgeted overheads per unit × standard volume
c) Budgeted factory overheads = Budgeted fixed overheads per unit × budgeted volume + variable overheads
d) Budgeted factory overheads = Budgeted fixed overheads + planned variable overhead per unit × planned volume

Question 9: Which of the following statements is FALSE of Just-In-Time (JIT) manufacturing systems?

a) Demand pull means a closer relationship with the customer.
b) The power of suppliers is reduced.
c) Warehousing space and equipment needs are reduced.
d) After process re-engineering, time to complete the product is reduced.

Question 10: CarloffCremes (CC) planned to sell 40,000 Queen size at $20 each and 20,000 King size at $15 each. Actual sales of the former were 45,000 and 25,000 of the latter, at $19 and $16 respectively. Which of the following is TRUE of CC?

a) The sales price variance is $20,000 F
b) The sales variance is $175,000 F
c) The sales price variance is $20,000 U
d) The sales variance is $20,000 U

Question 11: The following information is for the third quarter of this year:
                                                 Planned               Actual
Production                                   92,000 units         87,000 units
Direct labor hours                          506,800 DL hrs     380,000 DL hrs
Fixed manufacturing overhead          $205,000             $182,400
Variable manufacturing overhead      $910,000             $841,500
Standard direct labor hour per unit    5.5   

Calculate the following three overhead variances.

a) Overhead volume variance
b) ?Overhead efficiency variance ?
c) Overhead spending variance

Question 12: The purchasing department of Bradley Inc. is responsible for companywide purchasing. Its total costs are assigned to each division based on the number of purchase orders the purchasing department processes for each division. The purchasing department's fixed costs are $300,000 per year, and it expects to process15, 000 purchase orders (POs) at a variable cost of $50 per purchase order. Purchasing costs do not include the cost of the items purchased.

Purchasing processed 16,000 POs during the year and incurred total costs (excluding the cost of the items purchased) of $1,180,000.

Answer all the questions below in full detail:

a) Design a performance evaluation report for the purchasing department.
b) Describe what each item in the report measures.
c) Evaluate the performance of the purchasing department.
d) What other performance measures would you want to collect and report for the purchasing department?

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Managerial Accounting: Total quality management-infrastructure of the organization
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