### Create an Account

Home / Questions / Consider the following two activities performing warranty work and purchasing components T...

# Consider the following two activities performing warranty work and purchasing components The warranty work costs

Consider the following two activities: performing warranty work and purchasing components. The warranty work costs \$60,000, and the warranty cost of the most efficient competitor is \$10,000. Purchasing components costs \$100,000 (5,000 purchase orders). A study reveals that the most efficient level would use 2,500 purchase orders and entail a cost of \$55,000.

a.\$45,000

b.\$55,000

c.\$60,000

d.\$100,000

62.A company spends \$25,000 a year for inspecting, \$20,000 for purchasing, and \$30,000 for reworking products. What would be the best estimate of non-value-added costs?

a.\$45,000

b.\$50,000

c.\$55,000

d.\$60,000

63.A manual process takes 18 minutes of direct labour time and 6 kg of material to make a product. Automating the process requires 12 minutes of machine time and 5 kg of material. The cost per labour hour is \$9, the cost per machine hour is \$7, and the cost per kilogram of materials is \$11.

What is the non-value-added cost per unit?

a.\$1.70 per unit

b.\$2.40 per unit

c.\$9.00 per unit

d.\$12.30 per unit

64.Using the original design, a machine requires 12 hours of setup time. By redesigning the machine, the setup time is reduced by 25%. The cost per setup hour is \$225. What is the reduction in non-value-added cost per setup?

a.\$225 per setup

b.\$450 per setup

c.\$675 per setup

d.\$800 per setup

65.A product currently requires four moves. By changing the plant layout, the number of moves can be reduced to zero. The cost per move is \$70. What is the reduction in the non-value-added cost of the moving activity?

a.\$0

b.\$4

c.\$70

d.\$280

66.Inspection time for a plant is 10,000 hours per year. The cost of inspection consists of the salaries of four inspectors, totalling \$60,000. Inspection also uses supplies costing \$3 per inspection hour. The company has a close to zero-defect state and has eliminated the need for any inspection activity. What is the non-value-added cost of inspection per year?

a.\$30,000

b.\$60,000

c.\$90,000

d.\$120,000

67.A plant produces 75 different electronic products. Each product requires an average of six components that are purchased externally. By redesigning the products, it is possible to produce the 75 products that have three components in common. This redesign will reduce the demand for purchasing, receiving, and paying bills. Estimated savings from the reduced demand are \$1,200,000 per year. What is the non-value-added cost of purchasing, receiving, and paying bills?

a.\$600,000

b.\$900,000

c.\$1,000,000

d.\$1,200,000

68.Which of the following activity performance measures is concerned with doing the activity right the first time it is performed?

a.time

b.efficiency

c.quality

d.velocity

69.What is the term for the time required to produce one unit of a product?

a.efficiency

b.velocity

c.speed

d.cycle time

70.What type of product meets or exceeds customer expectations?

a.a robust product

b.a defective product