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Chelsea Company has determined the following costs are associated with one of its products.  Lead time (weeks)  4 Average weekly usage (units)  50 Maximum weekly us age (units)  65\begin{array}{ll}\text { Lead time (weeks) } & 4 \\\text { Average weekly usage (units) } & 50 \\\text { Maximum weekly us age (units) } & 65\end{array} - The safety stock is


A) 45 units.
B) 60 units.
C) 3 units.
D) 50 units.

E) C) and D)
F) A) and B)

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Norwich Company has determined the following costs are associated with one of its products. E=EE = E conomic order quantity (EOQ) Q=\mathrm { Q } = Annual quantity used in units \quad \quad \quad \quad \quad 4800 P=P = Cost of placing one order (f) \quad \quad \quad \quad \quad \quad 3 C=A\mathrm { C } = \mathrm { A } nnual cost of carrying one unit in stock (E) \quad 8 - If the cost of carrying one unit in stock is increased to £4 and the annual quantity used in units increases to 20,000 units the economic order quantity (EOQ) is


A) 1225 units.
B) 568 units.
C) 1235 units.
D) 1866 units.

E) B) and D)
F) None of the above

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An ERP does not require integrated client-server technology

A) True
B) False

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Newcastle Company has determined the following costs are associated with one of its products. E=EE = E conomic order quantity (EOQ) Q=\mathrm { Q } = Annual quantity used in units \quad \quad \quad \quad \quad 3000 P=P = Cost of placing one order ( (£) ( £ ) \quad \quad \quad \quad \quad 10 C=AC = A nnual cost of carrying one unit in stock (£) \quad 0.8 - If the cost of placing an order is reduced to £6 the economic order quantity (EOQ) is


A) 100 units.
B) 274 units.
C) 212 units.
D) 250 units.

E) C) and D)
F) All of the above

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Explain how the lean production techniques fit into the various Management Accounting philosophies outlined in the chapter.

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Lean production techniques fit into vari...

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Norwich Company has determined the following costs are associated with one of its products. E=EE = E conomic order quantity (EOQ) Q=\mathrm { Q } = Annual quantity used in units \quad \quad \quad \quad \quad 4800 P=P = Cost of placing one order (f) \quad \quad \quad \quad \quad \quad 3 C=A\mathrm { C } = \mathrm { A } nnual cost of carrying one unit in stock (E) \quad 8 - If the annual cost of carrying one unit in stock is increased to £10 and the cost of placing one order is increased to £4 the economic order quantity (EOQ) is


A) 62 units.
B) 66 units.
C) 4 units.
D) 77 units.

E) A) and B)
F) A) and C)

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Outline what is meant by the plan-do-act cycle.

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The Plan-Do-Check-Act (PDCA) cycle, also...

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A key concept of the Just-In-Time is


A) the raw materials, work in process, and finished goods inventories of manufacturing companies act as buffers so that operations can proceed smoothly even if suppliers are late with deliveries or a department is unable to operate for a brief period due to breakdowns or other reasons.
B) the use of many suppliers in order to ensure rapid delivery of materials for production.
C) the maintenance of a stock of raw materials so that defective materials can be replaced quickly in order to maintain a high rate of productivity.
D) inventories are costly to carry and create operational problems.

E) B) and C)
F) C) and D)

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Newcastle Company has determined the following costs are associated with one of its products. E=EE = E conomic order quantity (EOQ) Q=\mathrm { Q } = Annual quantity used in units \quad \quad \quad \quad \quad 3000 P=P = Cost of placing one order ( (£) ( £ ) \quad \quad \quad \quad \quad 10 C=AC = A nnual cost of carrying one unit in stock (£) \quad 0.8 - If the cost of placing an order is increased to £15 and the annual quantity used in units decreases to 2,500 units the economic order quantity (EOQ) is


A) 335 units.
B) 315 units.
C) 320 units.
D) 306 units.

E) None of the above
F) B) and D)

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What is the solution to the silo mentality mentioned in chapter 18, page 746, and how would it work?

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The solution to the silo mentality mentioned in chapter 18, page 746, involves breaking down the barriers between different departments or teams within an organization. This can be achieved through improved communication, collaboration, and a shift in mindset towards a more holistic and interconnected approach to problem-solving and decision-making. One way to address the silo mentality is to encourage cross-functional teams and projects that require individuals from different departments to work together towards a common goal. This can help break down the "us vs. them" mentality and foster a sense of unity and shared purpose. Additionally, implementing regular meetings or forums where representatives from different departments can share information, discuss challenges, and collaborate on solutions can help to bridge the gaps between silos. Open and transparent communication channels, such as digital platforms or shared databases, can also facilitate the exchange of information and ideas across departments. Furthermore, leadership plays a crucial role in addressing the silo mentality by promoting a culture of collaboration, recognizing and rewarding cross-departmental teamwork, and actively discouraging behaviors that reinforce silos. Overall, the solution to the silo mentality involves a combination of structural changes, cultural shifts, and leadership support to create a more integrated and cohesive organization. By breaking down the barriers between silos, organizations can leverage the diverse expertise and perspectives of their employees to drive innovation, efficiency, and overall success.

Norwich Company has determined the following costs are associated with one of its products. E=EE = E conomic order quantity (EOQ) Q=\mathrm { Q } = Annual quantity used in units \quad \quad \quad \quad \quad 4800 P=P = Cost of placing one order (f) \quad \quad \quad \quad \quad \quad 3 C=A\mathrm { C } = \mathrm { A } nnual cost of carrying one unit in stock (E) \quad 8 - The Economic order quantity (EOQ) is


A) 10 units.
B) 74 units.
C) 60 units.
D) 25 units.

E) C) and D)
F) B) and D)

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Norwich Company has determined the following costs are associated with one of its products. E=EE = E conomic order quantity (EOQ) Q=\mathrm { Q } = Annual quantity used in units \quad \quad \quad \quad \quad 4800 P=P = Cost of placing one order (f) \quad \quad \quad \quad \quad \quad 3 C=A\mathrm { C } = \mathrm { A } nnual cost of carrying one unit in stock (E) \quad 8 - If the cost of carrying one unit in stock is increased to £4 the economic order quantity (EOQ) is


A) 1003 units.
B) 1974 units.
C) 1061 units.
D) 2510 units.

E) A) and B)
F) None of the above

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Discuss the process of the Business Process Re-engineering.

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Business Process Re-engineering (BPR) is...

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New technology does not offer new ways for companies to optimize working capital

A) True
B) False

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Newcastle Company has determined the following costs are associated with one of its products. E=EE = E conomic order quantity (EOQ) Q=\mathrm { Q } = Annual quantity used in units \quad \quad \quad \quad \quad 3000 P=P = Cost of placing one order ( (£) ( £ ) \quad \quad \quad \quad \quad 10 C=AC = A nnual cost of carrying one unit in stock (£) \quad 0.8 - If the cost of placing an order is increased to £15 the economic order quantity (EOQ) is


A) 335 units.
B) 305 units.
C) 310 units.
D) 250 units.

E) None of the above
F) A) and B)

Correct Answer

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Norwich Company has determined the following costs are associated with one of its products. E=EE = E conomic order quantity (EOQ) Q=\mathrm { Q } = Annual quantity used in units \quad \quad \quad \quad \quad 4800 P=P = Cost of placing one order (f) \quad \quad \quad \quad \quad \quad 3 C=A\mathrm { C } = \mathrm { A } nnual cost of carrying one unit in stock (E) \quad 8 - If the annual cost of carrying one unit in stock is increased to £10 and the cost of placing one order is increased to £6 the economic order quantity (EOQ) is


A) 69 units.
B) 18 units.
C) 76 units.
D) 70 units.

E) B) and D)
F) C) and D)

Correct Answer

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Norwich Company has determined the following costs are associated with one of its products. E=EE = E conomic order quantity (EOQ) Q=\mathrm { Q } = Annual quantity used in units \quad \quad \quad \quad \quad 4800 P=P = Cost of placing one order (f) \quad \quad \quad \quad \quad \quad 3 C=A\mathrm { C } = \mathrm { A } nnual cost of carrying one unit in stock (E) \quad 8 - The Economic order quantity (EOQ) is


A) 1100 units.
B) 1500 units.
C) 2300 units.
D) 2250 units.

E) A) and D)
F) B) and C)

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B

Chelsea Company has determined the following costs are associated with one of its products.  Lead time (weeks)  12 Average weekly usage (units)  120 Maximum weekly us age (units)  140\begin{array}{ll}\text { Lead time (weeks) } & 12 \\\text { Average weekly usage (units) } & 120 \\\text { Maximum weekly us age (units) } & 140\end{array} - The safety stock is


A) 240 units.
B) 206 units.
C) 300 units.
D) 150 units.

E) All of the above
F) C) and D)

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List as many as you can of the typical quality costs.

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Quality costs, also known as the cost of quality (CoQ), are categorized into four main types. These costs are associated with the effort to maintain product quality and the consequences of failing to do so. Here is a list of the typical quality costs: 1. **Prevention Costs**: These are costs incurred to prevent defects from occurring in the first place. They include: - Quality planning - Training and education for employees - Process control and improvement initiatives - Supplier qualification and assessment - Preventive maintenance on equipment - Design and development of robust processes - Investment in quality management systems 2. **Appraisal Costs**: These are costs associated with measuring, evaluating, or auditing products to ensure they meet quality standards. They include: - Inspection and testing of incoming materials - In-process and final product inspection and testing - Product and process audits - Calibration of measuring and test equipment - Costs associated with destructive testing loss - Supplier quality assurance activities 3. **Internal Failure Costs**: These are costs related to defects that are found before the product reaches the customer. They include: - Scrap and rework - Downtime caused by quality problems - Retooling or modification due to defects - Failure analysis and troubleshooting - Excess inventory to buffer against defects - Cost of wasted materials and labor 4. **External Failure Costs**: These are costs that occur after the product has been shipped to the customer and defects are found. They include: - Warranty claims and replacements - Returns and allowances for defective products - Handling complaints and customer support for quality issues - Product recalls and associated legal costs - Lost sales and reputation damage due to poor quality - Penalties for non-compliance with regulatory standards Understanding and managing these quality costs is crucial for businesses to maintain profitability and customer satisfaction. By investing in prevention and appraisal costs, companies can often reduce the much higher costs of internal and external failures.

Normal costing measures do not work where there are bottlenecks.

A) True
B) False

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