The Desired Target Quality Characteristic of a Product of Hanson

question 55

Multiple Choice

The desired target quality characteristic of a product of Hanson Component Manufacturing is 0.5. The customer-service manager knows that customers are likely to complain when the specification is off the desired quality characteristic by more than 0.025. On average, it costs the firm $2,000 to handle and resolve each complaint. The production manager of the Hanson Manufacturing suggests that the company test the product more thoroughly before shipping. The cost of additional testing and adjustments is estimated at $30.00 per unit.

Given the company's cost coefficient, k, what should the tolerance be (to five decimal places) before conducting additional testing and adjusting at the factory?

• A) 0.00001.
• B) 0.00306.
• C) 0.00063.
• D) 0.02500.
• E) 0.25000.

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Definitions:

Electrical Motor

A device that converts electrical energy into mechanical energy, commonly used in appliances, industrial equipment, and vehicles.

Manufacturing Overhead

includes all indirect costs associated with the production process, such as utilities, maintenance, and salaries of non-direct labor.

Standard Cost System

An accounting method that uses predetermined costs for product costing and decision-making purposes.

Standard Labor-Hours

The estimated amount of time that should be required to complete a task or produce a unit of goods.