Posted: April 13th, 2016

By how much did profits change as a result of changes in productivity related to materials?

18. For the current year, prevention costs are what percentage of sales?
a. 9.00%
b. 8.25%
c. 7.00%
d. 2.00%

19. Which of the following is NOT an example of a decision-making context when using quality cost information?
a. strategic pricing
b. flexible budget analysis
c. cost-volume-profit analysis
d. none of the above

20. _______________ is a predetermined amount of defective product that a company permits to be sold.
a. Acceptable quality level
b. Taguchi quality loss function
c. Zero defects
d. Kaizen

21. The productivity ratio used as a partial operational productivity measure is calculated as follows:
a. Output/Input
b. Input/Output
c. Input/Costs
d. Input/Sales

22. _______________ is an assessment of productive efficiency for all inputs combined.
a. Price recovery component
b. Profile measurement
c. Profit-linked productivity measurement
d. Total productivity measurement

Information about Jones Corporation is as follows:
2009 2010
Output (units) 120,000 130,000

Input quantities:
Materials (pounds) 37,500 40,000

Input prices:
Materials (per pound) $4 $6

23. What is the partial operational productivity measure for materials for 2009?
a. 0.3125
b. 0.6250
c. 3.2000
d. 3.2500

24. What is the partial operational productivity measure for materials for 2010?
a. 3.2000
b. 3.2500
c. 0.3077
d. 0.3125

Information about Cheng Corporation is as follows:
2009 2010
Output (units) 14,000 15,000
Selling price per unit $16 $16

Input quantities:
Materials (pounds) 1,750 1,900
Labor (hours) 1,400 1,525

Input prices:
Materials (per pound) $3 $4
Labor (per hour) $6 $7

25. By how much did profits change as a result of changes in productivity related to materials?
a. $600 decrease
b. $600 increase
c. $100 decrease
d. $100 increase

SECTION II ()

1. Prior to installing a JIT system, Johnson Company used machine hours to assign maintenance costs to its three products of 4-inch, 6-inch, and 8-inch plastic pipe.

The maintenance costs totaled $540,000 per year. The machine hours used by each product and the quantity produced of each product are as follows:
Machine Hours Quantity Produced
4-inch 10,000 3,750 rolls
6-inch 14,000 4,000 rolls
8-inch 21,000 5,000 rolls

After installing JIT, three manufacturing cells were created, and the cell workers were trained to perform maintenance. Maintenance costs for the three cells still totaled $540,000; however, these costs are now traceable to each cell.
Cell, 4-inch $ 90,000
Cell, 6-inch 160,000
Cell, 8-inch 290,000

Required:
a. Compute the maintenance cost per roll for each type of pipe before JIT is installed.
b. Compute the maintenance cost per roll for each type of pipe after JIT is installed.
c. Explain why the JIT maintenance cost per roll is more accurate than the cost per roll using the traditional approach.

2. Gibson, Inc., has developed ideal standards for four activities: labor, materials, inspection, and receiving.

Information is as follows:

Activity Activity Driver SQ AQ SP
Labor Hours 500 550 $ 32
Materials Pounds 2,000 2,500 48
Inspection Inspection hours 0 375 22
Receiving Orders 60 75 800

The actual prices paid per unit of each activity driver were equal to the standard prices.

Required:

Complete the following cost report.

Activity Value-Added Non-value-Added Actual

Labor $_____________ $_____________ $____________

Materials _____________ _____________ ____________

Inspection _____________ _____________ ____________

Receiving _____________ _____________ ____________

Totals $_____________ $_____________ $____________