STUDY UNIT SEVENTEEN PERFORMANCE MEASUREMENT AND PROCESS MANAGEMENT Flashcards
Competitive benchmarking is not the only form of benchmarking used in quality management. Other types include process benchmarking, sensitivity benchmarking, and internal benchmarking.
True
False
Correct
False
Your answer is correct.
The four most prominent types of benchmarking are competitive benchmarking, process (function) benchmarking, strategic benchmarking, and internal benchmarking.
Fact Pattern: The management and employees of We Move You, a large household goods moving company, decided to adopt total quality management (TQM) and continuous improvement (CI). They believed that, if their company became nationally known as adhering to TQM and CI, one result would be an increase in the company’s profits and market share.
The primary reason that We Move You adopted TQM was to achieve
A Reduced delivery time.
B Greater customer satisfaction.
C Greater employee participation.
D Reduced delivery charges.
B Greater customer satisfaction.
This answer is correct.
TQM is an integrated system that anticipates, meets, and exceeds customers’ needs, wants, and expectations.
Which of the following is a key to successful total quality management (TQM)?
A Creating appropriate hierarchies to increase efficiency.
B Focusing intensely on the customer.
C Training quality inspectors.
D Establishing a well-defined quality standard, then focusing on meeting it.
B Focusing intensely on the customer.
This answer is correct.
TQM emphasizes satisfaction of customers, both internal and external. TQM considers the supplier’s relationship with the customer, identifies customer needs, and recognizes that everyone in a process is at some time a customer or supplier of someone else, either inside or outside of the organization.
Which of the following balanced scorecard perspectives examines a company’s success in targeted market segments? A Internal business process. B Financial. C Customer. D Learning and growth.
C Customer.
This answer is correct.
Any critical success factor that addresses some aspect of the target market is included in the customer perspective
Which of the following personnel has primary responsibility for allocating sufficient resources to ensure successful completion of a project? A Project manager. B Project sponsor. C Steering committee. D Project team members.
B Project sponsor.
This answer is correct.
The project sponsor is vested with sufficient authority by executive management to allocate the resources that will ensure successful completion.
In responsibility accounting, a center’s performance is measured by controllable costs. Controllable costs are best described as including
A Direct material and direct labor only.
B Only those costs that the manager can influence in the current time period.
C Those costs about which the manager is knowledgeable and informed.
D Only discretionary costs.
B Only those costs that the manager can influence in the current time period.
This answer is correct.
A controllable cost is one that is directly regulated by a specific manager at a given level of production within a given time span or that the manager can significantly influence.
Decentralized firms can delegate authority and yet retain control and monitor managers’ performance by structuring the organization into responsibility centers. Which one of the following organizational segments is most like an independent business? A Revenue center. B Investment center. C Profit center. D Cost center.
B Investment center.
This answer is correct.
An investment center is the organizational type most like an independent business because it is responsible for its own revenues, costs incurred, and capital invested. The other types of centers do not incorporate all three element
The costs of quality that are incurred in detecting units of product that do not conform to product specifications are referred to as A Rework costs. B Failure costs. C Prevention costs. D Appraisal costs.
D Appraisal costs
This answer is correct.
Appraisal embraces such activities as statistical quality control programs, inspection, and testing. Appraisal costs are those costs (such as test equipment maintenance and destructive testing) incurred to detect which products do not conform to specifications.
For a fixed-price proposal, the deliverables due on the contract are not clearly defined. As a result, the potential contractor should
A Modify the terms to account for unforeseen difficulties that may arise.
B Wait to bid until the deliverables are clearly defined.
C Submit the bid because the client’s price seems more than adequate to meet the contract requirements.
D Build in a cost escalator to adjust for materials price increases during the execution of the contract.
B Wait to bid until the deliverables are clearly defined.
This answer is correct.
Waiting to bid until the deliverables are clearly defined is necessary in order to fully understand all the costs involved and set an appropriate price.
subunit 17.7 Outline
The internal audit activity has undertaken an audit of the shipping and receiving department of a department store chain. The best engagement tool for this purpose most likely is A Strategic benchmarking. B Internal benchmarking. C Process benchmarking. D Competitive benchmarking.
C Process benchmarking.
This answer is correct.
Process (function) benchmarking studies operations of organizations with similar processes regardless of industry. Thus, the benchmark need not be a competitor or even a similar entity. This method may introduce new ideas that provide a significant competitive advantage. The advantage of process benchmarking is that it permits a wider choice of benchmarked organizations. Thus, the best practices for a shipping and receiving function may not be found in the same industry.
View Subunit 17.4 Outline
Managerial performance may be measured in many ways. For example, an internal nonfinancial measure is A Customer satisfaction. B Market share. C Manufacturing lead time. D Delivery performance.
C Manufacturing lead time.
This answer is correct.
Feedback regarding managerial performance may take the form of financial and nonfinancial measures that may be internally or externally generated. Moreover, different measures have a long-term or short-term emphasis. Examples of internal nonfinancial measures are product quality, new product development time, and manufacturing lead time (cycle time).
Rockford Manufacturing Corporation uses a responsibility accounting system in its operations. Which one of the following items is least likely to appear in a performance report for a manager of one of Rockford’s assembly lines?
A Repairs and maintenance.
B Materials.
C Direct labor.
D Depreciation on the manufacturing facility.
D Depreciation on the manufacturing facility.
This answer is correct.
The manager of an assembly line cannot make the decision whether or not to invest in the machinery of the line. Managers in a responsibility accounting system can only be held responsible for revenue and cost elements that are subject to their control.
View Subunit 17.1 Outline
Product-quality-related costs are part of a total quality control program. A product-quality-related cost incurred in detecting individual products that do not conform to specifications is an example of a(n) A Opportunity cost. B Appraisal cost. C Prevention cost. D External failure cost.
B Appraisal cost.
This answer is correct.
Quality-related costs can be subdivided into four categories: external failure costs, internal failure costs, prevention costs, and appraisal costs. Appraisal costs embrace such activities as statistical quality control programs, inspection, and testing. Thus, the cost of detecting nonconforming individual products is an appraisal cost.
View Subunit 17.5 Outline
A manufacturer mass produces nuts and bolts on its assembly line. The line supervisors sample every nth unit for conformance with specifications. Once a nonconforming part is detected, the machinery is shut down and adjusted. The most appropriate tool for this process is a A ISO 9000 audit. B Fishbone diagram. C Statistical quality control chart. D Cost of quality report.
C Statistical quality control chart.
This answer is correct.
Statistical quality control is a method of determining whether the shipment or production run of units lies within acceptable limits. It is also used to determine whether production processes are out of control. Statistical control charts are graphic aids for monitoring the status of any process subject to random variations.
View Subunit 17.4 Outline
Under the balanced scorecard concept, employee satisfaction and retention are measures used under which of the following perspectives?
A. Customer.
B. Learning and growth.
C. Financial.
D. Internal business.
B. Learning and growth.
Answer (B) is correct.
The level of employee satisfaction and retention directly relates to the learning and growth perspective.
17.2.23)
