Question 1

Answer the following questions using the information below:
Captain Carl's Seascapes produces sea pictures for sale through catalogs. The company has two workstations, photo production and framing. The photo production station is limited by the speed of operating the photo development machine. Framing is limited by the speed of the employees. Framing normally waits for work from photo production. Each department works an eight-hour day. If Captain Carl's Seascapes adds an earlier half shift so that photo production begins work four hours earlier than framing each day, the two departments generally finish their work at about the same time. Not only does this eliminate the bottleneck, but it also increases finished units produced each day by 200 units. All units produced can be sold. The cost of operating the photo production department four more hours each day is $1,250. The contribution margin of the finished products is $10 each.
-What is the total production per day if the change is made?
A)50 units
B)200 units
C)400 units
D)600 units

Accepted Answer

The answer of Answer the following questions using the information...

Question 2

Producing more nonbottleneck output:
A)creates more inventory, but does not increase throughput contribution
B)creates more inventory and increases throughput contribution
C)creates less pressure for the bottleneck workstations
D)allows for the maximization of overall contribution

Accepted Answer

Producing more nonbottleneck output creates more inventory without increasing throughput contribution because the bottleneck limits the overall system capacity.

Question 3

Manufacturing Cycle Efficiency (MCE)= Value-added Manufacturing Time divided by Manufacturing Cycle Time

Accepted Answer

MCE is calculated by dividing the value-added manufacturing time by the manufacturing cycle time, making the statement true.

Question 4

Answer the following questions using the information below:
Speedy Dress Manufacturing has two workstations, cutting and finishing. The cutting station is limited by the speed of operating the cutting machine. Finishing is limited by the speed of the workers. Finishing normally waits for work from cutting. Each department works an eight-hour day. If cutting begins work two hours earlier than finishing each day, the two departments generally finish their work at about the same time. Not only does this eliminate the bottleneck, but also it increases finished units produced each day by 160 units. All units produced can be sold even though the change increases inventory stock by 20% from 400 units. The cost of operating the cutting department two more hours each day is $1,600. The contribution margin of the finished products is $6 each. Inventory carrying costs are $0.40 per unit per day.
-What is the change in the daily contribution margin if the change is made?
A)$(608)
B)$(634)
C)$(672)
D)$800

Accepted Answer

The answer of Answer the following questions using the information...

Question 5

When a firm has a bottleneck machine, a good way to manage the bottleneck is to make sure that prior machines produce more units for the bottleneck machine to increase its throughput.

Accepted Answer

Increasing the input to a bottleneck machine without addressing its capacity will lead to increased work-in-progress inventory and inefficiencies, not increased throughput.

Question 6

Acme Janitor Service has always taken pride in the fact that it had one of the highest customer response times in the home cleaning service industry. However, as the products manufactured for this industry have become more complex, the company's customer response time has declined.
Required:
Why do you think that response time declined if all other quality factors have remained the same?

Accepted Answer

The answer of Acme Janitor Service has always taken pride...

Question 7

Throughput contribution is equal to revenues minus direct material and direct labor costs.

Accepted Answer

Throughput contribution is equal to revenues minus direct material costs only, not direct labor costs.

Question 8

Answer the following questions using the information below:
Speedy Dress Manufacturing has two workstations, cutting and finishing. The cutting station is limited by the speed of operating the cutting machine. Finishing is limited by the speed of the workers. Finishing normally waits for work from cutting. Each department works an eight-hour day. If cutting begins work two hours earlier than finishing each day, the two departments generally finish their work at about the same time. Not only does this eliminate the bottleneck, but also it increases finished units produced each day by 160 units. All units produced can be sold even though the change increases inventory stock by 20% from 400 units. The cost of operating the cutting department two more hours each day is $1,600. The contribution margin of the finished products is $6 each. Inventory carrying costs are $0.40 per unit per day.
-What is the total production per day if the change is made?
A)6400 units
B)800 units
C)880 units
D)1600 units

Accepted Answer

The answer of Answer the following questions using the information...

Question 9

The theory of constraints describes methods to maximize operating income when faced with some bottleneck and some nonbottleneck operations.

Accepted Answer

The theory of constraints is a management philosophy that aims to improve overall organizational performance by identifying and managing constraints or bottlenecks. It provides methods for maximizing operating income by focusing on improving bottleneck operations and making sure that non-bottleneck operations support the overall flow of production. Therefore, the statement is true.

Question 10

The theory of constraints is used for cost analysis when:
A)a manufacturing company produces multiple products and uses multiple manufacturing facilities and /or machines
B)using a long-term time horizon
C)operating costs are assumed fixed
D)All of these answers are correct.

Accepted Answer

The theory of constraints is commonly used in manufacturing companies that have multiple products and facilities or machines. It helps identify the constraints or bottlenecks in the production process and how to optimize them to increase efficiency and reduce costs. Using a long-term time horizon or assuming fixed operating costs are not necessarily related to the application of the theory of constraints.

Question 11

The theory of constraints considers a short-run time horizon and assumes operating costs are fixed.

Accepted Answer

The theory of constraints focuses on maximizing throughput by identifying and addressing bottlenecks, assuming that operating costs remain constant in the short-run.

Question 12

Answer the following questions using the information below:
Captain Carl's Seascapes produces sea pictures for sale through catalogs. The company has two workstations, photo production and framing. The photo production station is limited by the speed of operating the photo development machine. Framing is limited by the speed of the employees. Framing normally waits for work from photo production. Each department works an eight-hour day. If Captain Carl's Seascapes adds an earlier half shift so that photo production begins work four hours earlier than framing each day, the two departments generally finish their work at about the same time. Not only does this eliminate the bottleneck, but it also increases finished units produced each day by 200 units. All units produced can be sold. The cost of operating the photo production department four more hours each day is $1,250. The contribution margin of the finished products is $10 each.
-The Glass Shop, a manufacturer of large windows, is experiencing a bottleneck in its plant. Setup time at one of its workstations has been identified as the culprit. A manager has proposed a plan to reduce setup time at a cost of $72,000. The change will result in 8,000 additional windows. The selling price per window is $18, direct labor costs are $3 per window, and the cost of direct materials is $5 per window. Assume all units produced can be sold. The change will result in an increase in the throughput contribution of:
A)$104,000
B)$80,000
C)$32,000
D)$8,000

Accepted Answer

The increase in throughput contribution is equal to the increase in units produced multiplied by the contribution margin per unit. In this case, the increase in units produced is 8,000 and the contribution margin per unit is $10, so the increase in throughput contribution is $80,000.

Question 13

Keeping the bottleneck operation busy and subordinating all nonbottleneck operations to the bottleneck operation involves:
A)maximizing the contribution margin of the nonbottleneck operation
B)keeping the bottleneck resource busy at least 90% of the time
C)having the workers at the nonbottleneck operation or machine improving their productivity
D)None of these answers is correct.

Accepted Answer

The focus should be on keeping the bottleneck operation busy, not on maximizing nonbottleneck operations or improving their productivity.

Question 14

Answer the following questions using the information below:
Captain Carl's Seascapes produces sea pictures for sale through catalogs. The company has two workstations, photo production and framing. The photo production station is limited by the speed of operating the photo development machine. Framing is limited by the speed of the employees. Framing normally waits for work from photo production. Each department works an eight-hour day. If Captain Carl's Seascapes adds an earlier half shift so that photo production begins work four hours earlier than framing each day, the two departments generally finish their work at about the same time. Not only does this eliminate the bottleneck, but it also increases finished units produced each day by 200 units. All units produced can be sold. The cost of operating the photo production department four more hours each day is $1,250. The contribution margin of the finished products is $10 each.
-What is the change in the daily contribution margin if the change is made?
A)$250
B)$750
C)$2,000
D)$800

Accepted Answer

The answer of Answer the following questions using the information...

Question 15

Norton's Convenience store has a variable demand. The daily demand ranges from 270 to 330 customers a day who average purchasing 5 items each. The average daily demand is 300 customers. The convenience store currently operates 12 hours a day. Each order takes approximately 2 minutes.
Required:
a. What is the average customer waiting time, in minutes?
b. What is the cycle time for an order?
c. Norton has decided that the waiting time is too long and has increased the hours the store is open to 15 hours. What is the waiting time now?

Accepted Answer

The answer of Norton's Convenience store has a variable demand....

Question 16

In the theory of constraints, the only direct costs are:
A)investment costs
B)direct material
C)direct material and direct labor
D)direct material, direct labor, and variable overhead costs

Accepted Answer

The answer of In the theory of constraints, the only...

Question 17

Throughput contribution equals revenues minus:
A)direct material and direct labor costs
B)direct material costs and minus operating costs
C)direct material costs of goods sold
D)operating costs

Accepted Answer

Throughput contribution is calculated as revenues minus the direct material costs of goods sold, focusing on the costs directly tied to production.

Question 18

Brown Laundry has a variable demand. The daily demand ranges from 100 to 140 customers a day with an average of 5 items. The average daily demand is 110 customers. The laundry operates 10 hours a day. Each order takes approximately 5 minutes.
Required:
a. What is the average customer waiting time, in minutes?
b. What is the cycle time for an order?
c. The manager has decided that the waiting time is too long and has increased the workday to 11 hours. What is the waiting time now? Will the customers be any happier?

Accepted Answer

The answer of Brown Laundry has a variable demand. The...

Question 19

When considering the theory of constraints, operating costs refer to all costs involved in the manufacturing process.

Accepted Answer

Operating costs refer specifically to the costs associated with running a particular machine or process, rather than all costs involved in the manufacturing process.

Question 20

Brix, Inc., prepares frozen food for fast-food restaurants. It has two workstations, cooking and assembly. The cooking station is limited by the cooking time of the food. Assembly is limited by the speed of the workers. Assembly normally waits on food from cooking. Because the demand has increased in recent months to 2,800 dozen units, management is considering adding another cooking station or else having the cooks start to work earlier. The monthly cost of operating the cooking station one more hour each day is $2,400. The cost of adding another cooking station would add an average of $10 per hour. The current operating hours total eight hours a day, 22 days a month. The contribution margin of the finished products is currently $8 per dozen. Inventory carrying costs average $2.00 per dozen per month. Either the extra hour or the new cooking station would increase production by 20 dozen a day, with a long-run increase of 80 dozen units in finished goods inventory to 280 dozen.
Required:
a. What is the total production per month if the change is made?
b. What is the increase in the expected monthly product contribution for each of the possible changes? Assume long-run production equals sales.

Accepted Answer

The answer of Brix, Inc., prepares frozen food for fast-food...

Quiz 19: Balanced Scorecard: Quality, Time, and the Theory of Constraints

Producing more nonbottleneck output:

Manufacturing Cycle Efficiency (MCE)= Value-added Manufacturing Time divided by Manufacturing Cycle Time

When a firm has a bottleneck machine, a good way to manage the bottleneck is to make sure that prior machines produce more units for the bottleneck machine to increase its throughput.

Throughput contribution is equal to revenues minus direct material and direct labor costs.

The theory of constraints describes methods to maximize operating income when faced with some bottleneck and some nonbottleneck operations.

The theory of constraints is used for cost analysis when:

The theory of constraints considers a short-run time horizon and assumes operating costs are fixed.

Keeping the bottleneck operation busy and subordinating all nonbottleneck operations to the bottleneck operation involves:

In the theory of constraints, the only direct costs are:

Throughput contribution equals revenues minus:

When considering the theory of constraints, operating costs refer to all costs involved in the manufacturing process.