Answer the Following Questions Using the Information Below

question 9

Multiple Choice

Answer the following questions using the information below:
Tri-State Manufacturing expects to spend $800,000 in 2012 in appraisal costs if it does not change its incoming materials inspection method. If it decides to implement a new receiving method, it will save $80,000 in fixed appraisal costs and variable costs of $0.40 per unit of finished product. The new method involves $120,000 in training costs and an additional $160,000 in annual equipment rental. It takes two units of material for each finished product.
Internal failure costs average $160 per failed unit of finished goods. During 2011, 5% of all completed items had to be reworked. External failure costs average $400 per failed unit. The company's average external failures are 1% of units sold. The company carries no ending inventories, because all jobs are on a per order basis and a just-in-time inventory ordering method is used.
-The amount of time from when a customer places an order for a product or requests a service to when the product or service is delivered to the customer is referred to as:

• A)manufacturing lead time
• B)bottleneck
• C)customer-response time
• D)a time driver

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Definitions:

Customer Cost Analysis

This analysis involves examining the costs associated with acquiring and servicing a customer, to determine the value of the customer relationship and inform strategic decisions.

Capacity Analysis

Estimating the necessary production capacity for an organization to cater to the ever-changing demands of its products.

Customer Support Department

A division within a company dedicated to assisting customers with their inquiries, issues, or complaints.

Time-Driven Activity-Based Costing

A costing method that assigns costs based on the actual time resources are utilized for activities, improving accuracy by considering variable resource demands.