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Question # 00003262 Posted By: mac123 Updated on: 11/08/2013 12:26 PM Due on: 11/23/2013
Subject Accounting Topic Accounting Tutorials:
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36. Ken Yalters, the COO of FreshSkin, asked his cost management team for a product line profitability analysis for his firm's two products -


Askin and Bskin. The two products are skin care products that require a large amount of research and development and advertising. He received the report below. Ken concluded that Askin was the more profitable product, and that perhaps cost-cutting measures should be applied to the Bskin product.

Seventy-five percent of the research and development and selling expenses were traceable to Askin.

Profit before taxes for the Bskin product, per life-cycle income statements, is:

A. $175,000.

B. $425,000.

C. $522,500.

D. $207,500.

E. $332,500.

37. The management accountant at Iang Manufacturing Co. collected the following data in preparation for a life-cycle analysis on one of its products, a leaf blower:

The stage of the sales life cycle the product is determined to be:

A. Introduction.

B. Growth

C. Maturity.

D. Decline.

E. Withdrawal.

38. Which of the following is a theory of constraints (TOC) measure of product profitability that equals price less materials cost, including all purchased components and materials handling costs?

A. Takt time.

B. Throughput margin.

C. Profitability margin.

D. Price analysis.

E. A

F. B

G. C

H. D

39. The management accountant at Jang Manufacturing Co. collected the following data in preparation for a life-cycle analysis on one of its products, a leaf blower:

The stage of the sales life cycle the product is in is:

A. Introduction.

B. Growth.

C. Maturity.

D. Decline.

E. Withdrawal.

40.Bryan Inc. produces a specialty top-quality juice machine. The product, the JM50, requires four processes to be completed. Specifically, these processes are exterior construction, pulp filter insertion, painting, and packaging. Each process is performed at separate workstations with different completion rates:

Exterior construction can manufacture 100,000 juicer exteriors per day. Pulp filter insertion can install 25,000 filters every 6 hours.

Painting can decorate 3,000 juicers every half hour. Packaging can package 5,000 juicers per hour.

The plant operates 24/7, 24 hours a day every day of the week.


How many JM50 machines can Bryan Inc. manufacture per month (assume an average 30 day month)?

A. 4,320,000 juicers.

B. 3,600,000 juicers.

C. 3,000,000 juicers.

D. 3,200,000 juicers.

41. Bryan Inc. produces a specialty top-quality juice machine. The product, the JM50, requires four processes to be completed. Specifically, these processes are exterior construction, pulp filter insertion, painting, and packaging. Each process is performed at separate workstations with different completion rates:

Exterior construction can manufacture 100,000 juicer exteriors per day. Pulp filter insertion can install 25,000 filters every 6 hours.

Painting can decorate 3,000 juicers every half hour. Packaging can package 5,000 juicers per hour.

The plant operates 24/7, 24 hours a day every day of the week. Which function(s) is/are the bottleneck(s)?

A. Exterior construction and pulp filter insertion.

B. Pulp filter insertion.

C. Painting.

D. Packaging.

E. Exterior construction.

42. Bryan Inc. produces a specialty top-quality juice machine. The product, the JM50, requires four processes to be completed. Specifically, these processes are exterior construction, pulp filter insertion, painting, and packaging. Each process is performed at separate workstations with different completion rates:

Exterior construction can manufacture 100,000 juicer exteriors per day. Pulp filter insertion can install 25,000 filters every 6 hours.

Painting can decorate 3,000 juicers every half hour. Packaging can package 5,000 juicers per hour.

The plant operates 24/7, 24 hours a day every day of the week.

What is the least amount of monthly capacity you would have to add to the bottleneck(s) to shift the bottleneck to a different process?

A. 2,000,001 juicers per month.

B. 600,001 juicers per month.

C. 1,320,001 juicers per month.

D. 50,001 juicers per month.

43. Bryan Inc. produces a specialty top-quality juice machine. The product, the JM50, requires four processes to be completed. Specifically, these processes are exterior construction, pulp filter insertion, painting, and packaging. Each process is performed at separate workstations with different completion rates:

Exterior construction can manufacture 100,000 juicer exteriors per day. Pulp filter insertion can install 25,000 filters every 6 hours.

Painting can decorate 3,000 juicers every half hour. Packaging can package 5,000 juicers per hour.

The plant operates 24/7, 24 hours a day every day of the week. What cost management technique does this case illustrate?

A. Target costing.

B. Theory of constraints.

C. Life-cycle costing.

D. ABC analysis.

44. Place the phases of the cost life cycle (value chain) in the correct order from upstream to downstream activities.

A. Manufacturing, R&D, Design, Customer Service, Marketing & Distribution.

B. Design, R&D, Marketing & Distribution, Manufacturing, Customer Service.

C. Customer Service, Design, R&D, Manufacturing, Marketing & Distribution.

D. R&D, Design, Manufacturing, Marketing & Distribution, Customer Service.

E. Marketing & Distribution, Customer Service, Design, R&D, Manufacturing.

45. Target cost can be defined as:

A. Manufacturing cost - sales price.

B. Competitive price - desired profit.

C. Desired profit - market price.

D. Target price - manufacturing cost.

46. Which of the following is the speed at which units must be manufactured to meet customer demand?

A. Production time.

B. Manufacturing time.

C. Takt time.

D. Throughput time.

47. Electronic Component Company is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" DVD player for a price of $250. It costs ECC $210 to make the player. ECC's main competitor is coming to market with a new DVD player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 DVD players per year. Irrespective of the competitor's price, what is EEC's required selling price if the target profit is 25% of sales and current costs cannot be reduced?


A. $280.00.


B. $292.50.

C. $299.00.

D. $308.50.

48. Electronic Component Company is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" DVD player for a price of $250. It costs ECC $210 to make the player. ECC's main competitor is coming to market with a new DVD player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 DVD players per year. What is the target cost if target profit is 20% of sales and ECC must meet the competitive price of $220?

A. $168.50.

B. $176.00.

C. $184.25.

D. $190.00.

49. Electronic Component Company is a producer of high-end video and music equipment. ECC currently sells its top of the line "ECC" DVD player for a price of $250. It costs ECC $210 to make the player. ECC's main competitor is coming to market with a new DVD player that will sell for a price of $220. ECC feels that it must reduce its price to $220 in order to compete. The sales and marketing department of ECC believes the reduced price will cause sales to increase by 15%. ECC currently sells 200,000 DVD players per year. Assuming sales and marketing are not correct in their estimation and the volume of sales is not changed and ECC meets the competitive price, what is the target cost if ECC wants to maintain its same income level?

A. $210.

B. $200.

C. $190.

D. $180.

50. Which of the following phases are included in the sales life cycle?

A. A

B. B

C. C

D. D

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