Operations Management
Final Exam
Course Introduction
Operations Management focuses on the design, execution, and improvement of the systems and processes that organizations use to produce goods and deliver services. This course covers key concepts such as process analysis, capacity planning, inventory control, quality management, supply chain coordination, and the strategic role of operations in achieving organizational goals. Students will analyze real-world case studies, explore quantitative and qualitative decision-making tools, and develop skills to optimize efficiency, reduce costs, and enhance value creation in both manufacturing and service industries.
Recommended Textbook
Cornerstones of Cost Accounting 1st Edition by Don
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20 Chapters
2433 Verified Questions
2433 Flashcards
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Page 2
R. Hansen
Chapter 1: Introduction to Cost Management
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) What is the role of the controller in an organization? Describe some of the activities over which he or she has control.
Answer: The controller is responsible for both internal and external accounting.These responsibilities usually include such diverse activities as taxes, SEC reports, cost accounting, budgeting, internal auditing, financial accounting, and systems accounting.
Q2) Which of the following positions would most likely be a staff manager?
A) manager of a Sears store
B) president
C) manager of a clothing division
D) controller
Answer: D
Q3) Which of the following duties is usually assigned to the controller?
A) receiving, maintaining custody of, and disbursing monies and securities
B) directing the granting of credit to clients
C) investing the organization's funds
D) tax planning
Answer: D
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3
Chapter 2: Basic Cost Management Concepts
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Sample Questions
Q1) Refer to Figure 2-12.If production increased to 32,000 units next year, what is the effect on variable product costs per unit and total product costs per unit respectively?
A) remain the same; decrease
B) remain the same; remain the same
C) increase; remain the same
D) decrease; increase
Answer: A
Q2) Which of the following costs incurred by a furniture manufacturer would be a product cost?
A) lumber
B) office salaries
C) commissions paid to sales staff
D) controller's salary
Answer: A
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Chapter 3: Cost Behavior
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Sample Questions
Q1) In the formula Y = F + VX, Y refers to the A) slope.
B) intercept.
C) dependent variable.
D) independent variable.
Answer: C
Q2) Refer to Figure 3-9.What is the cumulative average time per batch using the incremental unit-time learning curve for 2,000 units?
A) 180
B) 100
C) 90
D) 80
Answer: C
Q3) Refer to Figure 3-7.The coefficient of determination in this model tells us that A) the slope is 14.05.
B) the intercept is 100.41.
C) 80 percent of the variation in the overhead variable is explained by DLH.
D) the slope is significant.
Answer: C
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Page 5
Chapter 4: Activity-Based Costing
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Sample Questions
Q1) Refer to Figure 4-5.How much was overhead over/underapplied?
A) $25,000
B) $17,500
C) $42,500
D) none of these
Q2) In the time-driven ABC systems, managers
A) assign resources to departments, then activities.
B) assign resource costs first to activities, then to products.
C) directly estimate the resource demands imposed by each product.
D) none of these.
Q3) The use of unit-based activity drivers to assign costs tends to
A) overcost low-volume products.
B) overcost high-volume products.
C) undercost all products.
D) overcost all products.
Q4) Refer to 4-19.What is (are) the facility-level activity(ies)?
A) providing utilities
B) providing space
C) inspecting
D) both a and b
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Chapter 5: Product and Service Costing: Job-Order System
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102 Flashcards
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Sample Questions
Q1) Which of the following costs is usually NOT easily traceable to finished units of product?
A) direct labor
B) manufacturing overhead
C) direct materials
D) all of these
Q2) Which of the following costs is NOT included on a job-order cost sheet?
A) direct material costs
B) applied factory overhead costs
C) direct labor costs
D) actual factory overhead costs
Q3) In ____________ a single product is produced on a continuous basis.
A) process production
B) job production
C) job-order production
D) both a and c
Q4) Compare and contrast perishability and intangibility in an automobile oil lubrication shop and architectural design firms.
Q5) Why are firms reluctant to use actual costing? How does normal costing solve the problems?
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Chapter 6: Process Costing
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Sample Questions
Q1) In process costing, costs are accounted for by A) year.
B) batch.
C) process.
D) job.
Q2) Refer to Figure 6-14.The cost per equivalent unit of production for conversion using the weighted average method is
A) $3.54.
B) $3.06.
C) $2.55.
D) $2.19.
Q3) Materials are added to a second production department and will not increase the number of units produced in this department.Adding materials to the second department will
A) decrease total ending work in process.
B) change the amount of factory overhead included in the ending work in process.
C) increase total unit cost.
D) not change the dollar amount transferred out of the department.
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Chapter 7: Allocating Costs of Support Departments and Joint Products
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Sample Questions
Q1) Deli Products produces two products, X and Y, in a single process.In 2011, the joint costs of this process were $25,000.In addition, 4,000 units of X and 6,000 units of Y were produced.Separable processing costs beyond the split-off point were X - $10,000; Y$20,000.X sells for $10.00 per unit; Y sells for $7.50 per unit. What amount of joint costs will be allocated to Product X using the physical units method?
A) $25,000
B) $-0-
C) $10,000
D) $15,000
Q2) What is the overhead rate for Department X assuming the direct method is used?
A) $27.00
B) $81.00
C) $93.75
D) $46.88
Q3) Joint costs are allocated because of A) financial reporting requirements.
B) tax reporting requirements.
C) IMA requirements.
D) both b and a.
Page 9
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Chapter 8: Budgeting for Planning and Control
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Sample Questions
Q1) Freedom Manufacturing Company would expect to have an accounts receivable balance on March 31 of
A) $45,000.
B) $55,500.
C) $39,600.
D) $90,000.
Q2) In a merchandising organization, the merchandise purchases budget replaces what budget from a manufacturing firm?
A) the administrative expense budget
B) the pro-forma income statement
C) the production budget
D) the cost of goods sold budget
Q3) Refer to Figure 8-4.CD Productions would expect to have an accounts receivable balance on June 30 of
A) $37,800.
B) $42,000.
C) $32,000.
D) $28,800.
Q4) Compare and contrast static budgets, flexible budgets, and activity-based budgets.
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Chapter 9: Standard Costing: a Functional-Based Control Approach
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Sample Questions
Q1) Which of the following factors would cause an unfavorable material quantity variance?
A) using poorly maintained machinery
B) using higher quality materials
C) using more highly skilled workers
D) receiving discounts for purchasing larger than normal quantities
Q2) Refer to Figure 9-3.What is the variable overhead spending variance for Reynolds?
A) $86,000 (U)
B) $0
C) $4,000 (F)
D) $10,000 (F)
Q3) What is the standard activity level on which Crawford based its fixed overhead rate?
A) 110,000 direct labor hours
B) 105,000 direct labor hours
C) 100,000 direct labor hours
D) 50,000 direct labor hours
Q4) Compare and contrast mix and yield variances.
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Chapter 10: Decentralization: Responsibility Accounting, Performance
Evaluation, and Transfer Pricing
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Sample Questions
Q1) The manager of a profit center is responsible for
A) delivering a quality product or service at reasonable but minimal cost.
B) decisions to invest in capital equipment.
C) decisions regarding revenue generation.
D) both a and c.
Q2) Which of the following would NOT be a reason for decentralization?
A) Managers will make decisions for their own benefit, rather than the organization's benefit.
B) Lower level managers have better access to information.
C) Upper management can spend more time focusing on strategic planning and decision making.
D) Lower level managers with decision-making ability are more motivated.
Q3) What is the weighted cost of capital?
A) 0.1098
B) 0.2480
C) 0.0827
D) 0.0366
Q4) Discuss the differences between centralized and decentralized decision making.Why would a firm decentralize its operations?
Q5) How are information, responsibility, and accountability related?
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Chapter 11: Strategic Cost Management
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Sample Questions
Q1) Which of the following manufacturing costs is assigned to products in JIT environment using direct tracing?
A) material handling
B) repairs and maintenance
C) custodial services
D) all of these
Q2) Which of the following manufacturing costs is assigned to products in a JIT environment using allocation?
A) cafeteria services
B) equipment depreciation
C) insurance and taxes
D) operating supplies
Q3) The industrial value-chain analysis
A) recognizes only complex linkages within the firm.
B) is not compatible with differentiation strategies.
C) determines a linked set of value-creating activities.
D) requires a firm to operate across the entire value chain.
Q4) Explain the difference between acceptable quality level and total quality control.
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Chapter 12: Activity-Based Management
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Sample Questions
Q1) The volume variance is
A) $20,000 unfavorable.
B) $40,000 unfavorable.
C) $60,000 unfavorable.
D) There is no variance.
Q2) The value-added costs are
A) $125,000.
B) $100,000.
C) $25,000.
D) $-0-.
Q3) Which of the following process dimensions of the activity-based management model deals with "what"?
A) resources
B) driver analysis
C) activities
D) performance measures
Q4) Describe how the activity-based management model combines the process and costing views.What are the steps involved in each? What are the objectives of the activity-based management system?
Q5) What is process value analysis?
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Chapter 13: The Balanced Scorecard: Strategic-Based Control
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Sample Questions
Q1) Which of the following is NOT an advantage of strategic-based responsibility accounting?
A) It includes perspectives that serve as a source of competitive advantage.
B) Change efforts are directed by the mission and strategy.
C) Responsibility is centralized within the organization.
D) All are advantages of strategic-based responsibility accounting.
Q2) Which of the following might be a measure of employee motivation, empowerment, and alignment?
A) process efficiency
B) suggestions per employee
C) customer satisfaction
D) units product cost
Q3) Performance expectations are communicated by setting
A) new initiatives.
B) targets.
C) a strategic vision.
D) activity measures.
Q4) How does the Balanced Scorecard communicate strategy to the organization? How is strategy translated into performance measures?
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Q5) Compare and contrast activity-based measures and strategic-based measures.
Chapter 14: Quality and Environmental Cost Management
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Sample Questions
Q1) _______________ are those incurred and paid for by the firm.
A) Realized external failure costs
B) Unrealized external failure costs
C) Realized internal failure costs
D) Unrealized internal failure costs
Q2) Costs incurred to determine whether products and services are conforming to requirements are called
A) external failure costs.
B) internal failure costs.
C) appraisal costs.
D) prevention costs.
Q3) _______________ 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
Q4) What does quality mean and how has improving quality increased firm value?
Q5) Define environmental costs and identify the four categories of environmental costs.Give an example of each category.
Page 16
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Chapter 15: Lean Accounting and Productivity Measurement
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Sample Questions
Q1) What is the usual formula for calculating product costs for value streams with multiple products?
A) total value stream cost of period / units shipped for period
B) budgeted value stream cost of period / units shipped for period
C) total value stream cost of period / units sold for period
D) budgeted value stream cost of period / forecasted units shipped for period
Q2) Which of the following is NOT considered a major source of waste?
A) waiting
B) joint products
C) overproduction of goods not needed
D) defective products
Q3) What is the partial operational productivity measure for materials for 2011?
A) 0.3125
B) 0.6250
C) 3.2000
D) 3.2500
Q4) Discuss the linkage between quality and productivity.
Q5) Define what constitutes total productive efficiency, including a definition of technical efficiency and allocative efficiency.
Q6) Explain the difference between technical and input trade-off efficiency. Page 17
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Chapter 16: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Refer to Figure 16-1.What is the variable product cost per unit for Kringel?
A) $0.85
B) $1.25
C) $0.40
D) $2.50
Q2) Barco, Inc.decided to institute an advertising campaign that would cost $75,000.Variable costs will remain at $15 per unit.Barco is currently selling 100,000 units of its product at $25 per unit.The marketing department is estimating that there will be a 10 percent increase in sales volume.With all else remaining the same, what will be the result of this decision?
A) An increase in operating income of $25,000
B) A decrease in operating income of $75,000
C) An increase in sales of $25,000
D) none of the above
Q3) The break-even point in units can be calculated using the contribution margin approach in the formula
A) Total Costs / Unit Contribution Margin.
B) Total Costs / Fixed Costs.
C) Fixed Costs / Selling Price per unit.
D) Fixed Costs / Unit Contribution Margin.
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Chapter 17: Activity Resource Usage Model and Tactical Decision Making
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Sample Questions
Q1) If Reggie Corporation wants to increase its profit by $18,000 on the special order, what is the minimum price it should charge per unit?
A) $4,014
B) $4,164
C) $5,100
D) $6,900
Q2) Salda Industries employs 500 workers in the factory.These workers produced 85,000 units in 2009.Due to a special order, the units produced in 2010 increased to 95,000 units.However, Salda produced these units without adding workers.How is that possible?
A) The plant had some unused activity capacity.
B) The employees were a flexible resource in this situation.
C) The labor cost associated with the additional units sold will be a relevant cost.
D) None of these
Q3) Tactical decision making relies
A) only on relevant cost information.
B) only on qualitative factors.
C) on relevant costs as well as other qualitative factors.
D) on neither relevant costs nor qualitative decisions.
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Chapter 18: Pricing and Profitability Analysis
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Sample Questions
Q1) Monopolistic competition is best defined as
A) a structure that has many buyers and sellers, but the products are differentiated on some basis.
B) a structure where customers are willing to pay a little more for the unique feature that appeals to them.
C) a structure that combines perfect competition and monopoly, but is closer to a competitive situation.
D) all of these.
Q2) Franklin Company's expected sales were 2,000 units at $100 per unit.During 2011, it had actual sales of 1,800 units at $110 per unit.Budgeted variable costs were $60 per unit. What is Franklin's sales price variance?
A) $8,000 (U)
B) $20,000 (U)
C) $18,000 (F)
D) $2,000 (U)
Q3) What are some of the pricing practices regulated by law?
Q4) Compare and contrast the various pricing policies used by companies.
Q5) Discuss the limitation of profit measurement.
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Chapter 19: Capital Investment
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Sample Questions
Q1) Under the current tax law, an asset that is classified as 5-year property and has a cost of $100,000 would result in a depreciation deduction in Year 2 of
A) $32,000.
B) $25,000.
C) $20,000.
D) $19,200.
Q2) Meulo Company is considering the purchase of production equipment that costs $800,000.The equipment is expected to generate an annual cash flow of $250,000 and have a useful life of five years with no salvage value.The firm's cost of capital is 12 percent.The company uses the straight-line method of depreciation with no mid-year convention.There are no income taxes. The payback period in years for the project is
A) 2.90 years.
B) 3.20 years.
C) 3.25 years.
D) 4.20 years.
Q3) Explain what a capital investment decision is.In your answer, distinguish between independent and mutually exclusive capital investment decisions.
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Chapter 20: Inventory Management: Economic Order
Quantity, Jit, and the Theory of Constraints
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Sample Questions
Q1) Safety stock is
A) the cost of holding inventory.
B) a non-value activity and should never be considered.
C) not considered when calculating the reorder point.
D) extra inventory carried to serve as insurance against fluctuations in demand.
Q2) The drum-buffer-rope system is another name for
A) a traditional inventory system.
B) a JIT inventory system.
C) a TOC inventory system.
D) both a and b.
Q3) If there is a delay in shipping the item, approximately how many days can be covered by the safety stock?
A) 40.00 days
B) 0.83 days
C) 8.00 days
D) 6.67 days
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