27 Jul TQM’s MCQs
A productivity index of 110% means that a company’s labor costs would have been 10% higher if it had not made production improvements. Now refer to the Income Statement in Digby’s Annual Report. The direct labor costs for Digby were $32,486. These labor costs could have been $20,000 higher if investments in training that increased productivity had not been made. What was the productivity index for Digby that led to such savings?
Investing $1,500,000 in TQM’s Channel Support Systems initiative will at a minimum increase demand for your products 1.7% in this and in all future rounds. (Refer to the TQM Initiative worksheet in the CompXM Decisions menu.) Looking at the Round 0 Inquirer for Andrews, last year’s sales were $163,189,230. Assuming similar sales next year, the 1.7% increase in demand will provide $2,774,217 of additional revenue. With the overall contribution margin of 34.1%, after direct costs this revenue will add $946,008 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year’s levels. How long will it take to achieve payback on the initial $1,500,000 TQM investment, rounded to the nearest month?
TQM investment will not have a significant financial impact
Bam’s product manager is under pressure to increase market share, but is uncertain about how to make the product more competitive. The product is reasonably well-positioned in the Thrift segment and enjoys relatively high awareness and accessibility. Which of the following would most likely result in a quick increase in market share?
Re-position the product to the ideal spot within the segment
Lower the unit selling price to the bottom limit of the segment price range
Increase the unit contribution margin by decreasing the MTBF
Increase awareness by 5%
According to information found on the production analysis page of the Inquirer, Chester sold 1126 units of Cat in the current year. Assuming that Cat maintains a constant market share, all the units of Cat are sold in the Nano market segment and the growth rate remains constant, how many years will it be before Cat will not be able to meet future demand unless the company adds production capacity? Exclude any existing inventory.
Which description best fits Andrews? For clarity:
– A differentiator competes through good designs, high awareness, and easy accessibility.
– A cost leader competes on price by reducing costs and passing the savings to customers.
– A broad player competes in all parts of the market.
– A niche player competes in selected parts of the market.
Which of these four statements best describes your company’s current strategy?
Andrews is a niche differentiator
Andrews is a broad differentiator
Andrews is a niche cost leader
Andrews is a broad cost leader
Deal is a product of the Digby company. Digby’s sales forecast for Deal is 1853 units. Digby wants to have an extra 10% of units on hand above and beyond their forecast in case sales are better than expected. (They would risk the possibility of excess inventory carrying charges rather than risk lost profits on a stock out.) Taking current inventory into account, what will Deal’s Production After Adjustment have to be in order to have a 10% reserve of units available for sale?
Chester’s Elite product Cell has an awareness of 72%. Chester’s Cell product manager for the Elite segment is determined to have more awareness for Cell than Andrews’ Elite product Art. She knows that the first $1M in promotion generates 22% new awareness, the second million adds 23% more and the third million adds another 5%. She also knows one-third of Cell’s existing awareness is lost every year. Assuming that Art’s awareness stays the same next year (77%), out of the promotion budgets below, what is the minimum Chester’s Elite product manager should spend in promotion to earn more awareness than Andrews’ Art product?
Bit is a product of the Baldwin company which is primarily in the Nano segment, but is also sold in another segment. Baldwin starts to create their sales forecast by assuming all policies (R&D, Marketing, and Production) for all competitors are equal this year over last. For this question assume that all 699 of units of Bit are sold in the Nano segment. If the competitive environment remains unchanged what will be the Bit product’s demand next year (in 000’s)?
In order to sell a product at a profit the product must be priced higher than the total of what it costs you to build the unit, plus period expenses, and plus overhead.
At the end of last year the broad cost leader Baldwin had an Elite product Bolt. Use the Inquirer’s Production Analysis to find Bolt’s production cost, (labor+materials). Exclude possible inventory carrying costs. Assume period expenses and overhead total 1/2 of their production cost. What is the minimum price the product could have been sold for to cover the unit cost, period expenses, and overhead?
Looking forward to next year, if Chester’s current cash balance is $20,201 (000) and cash flows from operations next period are unchanged from this period, and Chester takes ONLY the following actions relating to cash flows from investing and financing activities:
Issues 100 (000) shares of stock at the current stock price
Issues $400 (000) in bonds
Retires $10,000 (000) in debt
Which of the following activities will expose Chester to the most risk of needing an emergency loan?
Pays a $5.00 per share dividend
Liquidates the entire inventory
Purchases assets at a cost of $25,000 (000)
Sells $10,000 (000) of their long-term assets