Question 1

Which of the following are computer-based databases that include comprehensive information about the firm's cost drivers?
A) Cost tables.
B) Cost databases.
C) Cost driver tables.
D) Excel tables.

Accepted Answer

A

Question 2

Activity-based costing (ABC) and the theory of constraints (TOC) are viewed as methods that are:
A) Substitutions for one another.
B) Complementary.
C) Auxiliary.
D) Responsive.
E) Parallel.

Accepted Answer

ABC and TOC are complementary methods that can be used together to improve financial performance. ABC provides a way to accurately assign costs to products or services based on the activities required to produce them, while TOC helps to identify and manage the constraints that limit overall productivity and profitability. Together, these two methods can help organizations optimize their operations and maximize profitability.

Question 3

Henry Ford was an early pioneer in the use of:
A) the theory of constraints.
B) target costing.
C) life cycle costing.
D) just-in-time manufacturing.

Accepted Answer

B

Question 4

The theory of constraints (TOC) emphasizes which of the following?
A) Developing competitive constraints.
B) Finding and eliminating design constraints.
C) Removing bottlenecks from the production process.
D) Improving overall production efficiency.

Accepted Answer

The theory of constraints (TOC) emphasizes identifying and removing bottlenecks from the production process. This approach leads to an improvement in overall efficiency, but the primary focus is on eliminating constraints that impede productivity. Developing competitive constraints or eliminating design constraints may be important in some situations, but they are not the main emphasis of TOC.

Question 5

The theory of constraints (TOC) approach is strategically important in dynamic markets because it leads to:
A) A more responsive and flexible manufacturing environment.
B) Better customer relationships.
C) Quicker data accessibility.
D) Faster setup times.

Accepted Answer

The theory of constraints (TOC) approach focuses on identifying and eliminating bottlenecks in the manufacturing process, thus creating a more responsive and flexible environment. This is particularly important in dynamic markets where customer demands and market trends can quickly change. By implementing TOC, organizations can more quickly adapt to changing market conditions and improve their overall competitiveness. While B, C, and D may also be benefits of implementing TOC, they are not as closely tied to the strategic importance of the approach in dynamic markets.

Question 6

Many firms are finding it is difficult to compete successfully on cost leadership or differentiation alone, and they must, in fact, compete on both:
A) Cost and design.
B) Price and functionality.
C) Cost and price.
D) Design and functionality.
E) Cost and functionality.

Accepted Answer

The answer of Many firms are finding it is difficult...

Question 7

Generally, firms will price a product more competitively at which stages of the product's sales life cycle?
A) Product introduction and Growth.
B) Maturity and Decline.
C) Throughout the cycle.
D) At the end of the life cycle.

Accepted Answer

During the maturity and decline stages of a product's life cycle, competition tends to be higher, and the market is often saturated. To maintain or increase market share, firms may price their products more competitively.

Question 8

The sequence of activities within the firm which begins with research and development, followed by design, and manufacturing, marketing/distribution, and customer service is the:
A) Sales life cycle.
B) Target life cycle.
C) Market life cycle.
D) Critical life cycle.
E) Cost life cycle.

Accepted Answer

The sequence of activities described is known as the cost life cycle, which encompasses all stages from research and development to customer service, focusing on the costs incurred at each stage.

Question 9

The goals of coordinating manufacturing processes, reducing the amount of inventory, and improving overall productivity is particularly important in a:
A) Standard cost system.
B) Just-in-time system.
C) Normal costing system.
D) Activity based costing system.
E) Total quality management system.

Accepted Answer

Just-in-time (JIT) system focuses on coordinating manufacturing processes, reducing inventory, and improving overall productivity. JIT emphasizes the importance of minimizing waste and maximizing efficiency in production processes. Therefore, JIT is particularly important in achieving the goals of coordinating manufacturing processes, reducing inventory, and improving overall productivity.

Question 10

The sequence of phases in the product or service's life in the market - from the introduction of the product or service to the growth in sales and finally maturity, decline, and withdrawal from the market is the:
A) Sales life cycle.
B) Target life cycle.
C) Market life cycle.
D) Critical life cycle.
E) Cost life cycle.

Accepted Answer

The answer of The sequence of phases in the product...

Question 11

Which of the following is a method of reducing cost by identifying parts in different products that are common and interchangeable?
A) Target costing.
B) Value chain analysis.
C) Concurrent engineering.
D) Group technology.
E) Theory of constraints.

Accepted Answer

Group technology involves identifying and grouping similar parts or products together based on their characteristics and features. By doing so, it becomes possible to use common design and manufacturing processes, leading to reduced costs through economies of scale and reduced complexity.

Question 12

Reduced time-to-market, reduced expected service cost, and ease-of-manufacture are critical success factors at which stage of the cost life cycle?
A) R & D.
B) Product planning and scheduling.
C) Product design.
D) Manufacturing.

Accepted Answer

Reduced time-to-market, reduced expected service cost, and ease-of-manufacture are critical success factors at the product design stage of the cost life cycle. This is because product design affects manufacturing, service, and R&D costs, and making design decisions that prioritize these factors can help reduce overall costs and improve the product's competitiveness in the market.

Question 13

________ is an important first step in value engineering because it identifies critical consumer preferences that will define the product's desired functionality.
A) Consumer analysis
B) Sales force analysis
C) Design analysis
D) R&D analysis
E) Market place analysis

Accepted Answer

Consumer analysis is the process of identifying and understanding the needs, wants, and preferences of potential customers. It is important to conduct consumer analysis as the first step in value engineering because it helps to define the desired functionality of the product. By understanding what consumers want and need, the team can design a product that meets those needs and is more likely to be successful in the marketplace.

Question 14

Which one of the following is not one of the five steps in theory of constraints (TOC) analysis?
A) Identify the binding constraint(s).
B) Determine the most efficient utilization for each binding constraint.
C) Manage the flow through the binding constraint.
D) Identify those responsible for bottlenecks and make adjustments as needed.
E) Redesign the manufacturing process for flexibility and fast throughput.

Accepted Answer

EThe five steps in the Theory of Constraints (TOC) analysis are: 1) Identify the system's constraint(s), 2) Decide how to exploit the system's constraint(s), 3) Subordinate everything else to the above decision, 4) Elevate the system's constraint(s), and 5) If in the previous steps a constraint has been broken, go back to step 1. Options D and E are not part of these steps. Option D focuses on identifying responsible individuals rather than managing constraints, and option E suggests a complete redesign, which is not a step in the TOC process.

Question 15

During which stage of the sales life cycle of a product do sales continue to increase but at a decreasing rate, and competition tends to focus on cost?
A) Maturity.
B) Decline.
C) Inflation.
D) Growth.
E) Introduction.

Accepted Answer

During the maturity stage of the sales life cycle, sales continue to increase but at a decreasing rate. This is because the product has already been introduced and grown in popularity, so it may have reached saturation in the market. During this stage, competition tends to focus on cost, as companies try to offer lower prices to maintain their market share.

Question 16

Throughput margin is defined as sales less:
A) Direct labor costs.
B) Direct material costs.
C) Direct labor and material costs.
D) Processing costs.
E) Manufacturing costs.

Accepted Answer

The answer of Throughput margin is defined as sales less:
A)...

Question 17

Many firms choose to achieve target cost through redesign of the product or service because they recognize that design decisions:
A) Are life cycle costs with high downstream costs and benefits.
B) Account for much of the total product life cycle costs.
C) Impact costs at the manufacturing stage of the life cycle.
D) Are critical success factors in most firms.

Accepted Answer

Design decisions account for much of the total product life cycle costs. Therefore, redesigning the product or service can help firms achieve the target cost.

Question 18

Concurrent engineering relies on an integrated approach, in which the engineering/design process takes place throughout the cost life cycle using cross-functional teams. Strategically, this concurrent approach should give a firm all of the following except:
A) Flexibility in refining its design.
B) Ability to quickly incorporate customer suggestions.
C) Cost savings because of time saved.
D) More detailed analysis of product functionality.

Accepted Answer

Concurrent engineering allows for the engineering/design process to occur throughout the cost life cycle, incorporating different perspectives from cross-functional teams in order to create a more efficient, effective end product. This approach often results in cost savings due to time saved and increased flexibility in refining the design. Additionally, customer suggestions can be quickly incorporated into the design process. However, while concurrent engineering allows for a thorough analysis of product functionality, it does not necessarily result in more detailed analysis than traditional engineering methods.

Question 19

Which one of the following is true concerning the theory of constraints (TOC)?
A) Option A
B) Option B
C) Option C
D) Option D

Accepted Answer

The theory of constraints (TOC) is a management philosophy that focuses on identifying and managing the constraints that limit an organization's ability to achieve its goals. It is based on the premise that a chain is only as strong as its weakest link, and that by identifying and addressing those weaknesses, an organization can improve its overall performance. TOC has been applied successfully in a range of industries, including manufacturing, healthcare, and service sectors. While it acknowledges the importance of other management approaches, such as lean and Six Sigma, TOC places greater emphasis on overall system optimization and bottom-line results.

Question 20

When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising:
A) Target costing.
B) Life cycle costing.
C) Variable costing.
D) Absorption costing.
E) Competitive costing.

Accepted Answer

Target costing involves determining the desired cost for a product or service based on a competitive market price and a desired profit margin. It is commonly used in industries with high levels of competition where firms must be efficient in cost management to remain competitive. Life cycle costing, variable costing, absorption costing, and competitive costing are not relevant to the definition provided in the question.

Quiz 13: Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Which of the following are computer-based databases that include comprehensive information about the firm's cost drivers?

Activity-based costing (ABC) and the theory of constraints (TOC) are viewed as methods that are:

Henry Ford was an early pioneer in the use of:

The theory of constraints (TOC) emphasizes which of the following?

The theory of constraints (TOC) approach is strategically important in dynamic markets because it leads to:

Many firms are finding it is difficult to compete successfully on cost leadership or differentiation alone, and they must, in fact, compete on both:

Generally, firms will price a product more competitively at which stages of the product's sales life cycle?

The sequence of activities within the firm which begins with research and development, followed by design, and manufacturing, marketing/distribution, and customer service is the:

The goals of coordinating manufacturing processes, reducing the amount of inventory, and improving overall productivity is particularly important in a:

The sequence of phases in the product or service's life in the market - from the introduction of the product or service to the growth in sales and finally maturity, decline, and withdrawal from the market is the:

Which of the following is a method of reducing cost by identifying parts in different products that are common and interchangeable?

Reduced time-to-market, reduced expected service cost, and ease-of-manufacture are critical success factors at which stage of the cost life cycle?

________ is an important first step in value engineering because it identifies critical consumer preferences that will define the product's desired functionality.

Which one of the following is not one of the five steps in theory of constraints (TOC) analysis?

During which stage of the sales life cycle of a product do sales continue to increase but at a decreasing rate, and competition tends to focus on cost?

Throughput margin is defined as sales less:

Many firms choose to achieve target cost through redesign of the product or service because they recognize that design decisions:

Concurrent engineering relies on an integrated approach, in which the engineering/design process takes place throughout the cost life cycle using cross-functional teams. Strategically, this concurrent approach should give a firm all of the following except:

Which one of the following is true concerning the theory of constraints (TOC) ?

When a firm determines the desired cost for a product or service, given a competitive market price, in order to earn a desired profit, the firm is exercising: