Final Exam_Chapter 15
Consider a product that costs $5 to make, and is sold for $15. What is the productivity ratio?
3.1
________ is the series of steps and activities required to complete a process.
A procedure
Which of the following businesses should be most concerned with property, plant, and equipment?
A rancher
The total cost of obtaining an asset, including such costs as purchase price, transportation, installation, testing, and calibrating in order to ready it for its first productive use is termed as _____.
Acquisition cost
When determining the cost of a capital asset, the _______ is the sum of everything that you spend to acquire and prepare the asset for its first productive use.
Acquisition cost
A _____ describes the difference between the original acquisition cost of capital assets and the amount of depreciation expense that has been recognized to date.
Book value
Which of the following is not generally considered to be very useful for any purpose other than accounting and income taxes?
Book value
Kevin has taken an apartment on lease for five years with a monthly rental of $3,500. At the end of five years, Kevin will be the legal owner of the apartment after an additional payment of $80,000. This type of lease is an example of a(n) _____ lease.
Capital
_____ is an arbitrary, but regular and systematic, method used to take asset value as an expense for the purpose of calculating net income or loss.
Depreciation
Which of the following is a statistical technique that determines the size of inventory that a business must hold to minimize total inventory cost?
Economic order quantity
Which of the following statements is true of documenting the operations of your business?
Every business process does not have to be extensively documented.
A process is what a business does when it takes some raw material and converts it into a valuable output. This does not apply to service businesses.
F
Assigning a high value to inventory results in increased sales margin and reported profit, but at the price of paying increased income taxes.
F
Disposal value is based on determining the price of either a new asset or a used asset for which there is an organized market.
F
For a small business, the amount and type of inventory held for resale is not important because the supply of inventory and demand of customers can be matched at all times.
F
If your business is wholesale or retail merchandising, the issues of property, plant, and equipment (PPE) constitute your greatest investments and your greatest costs.
F
Planning, organizing, and staffing are primarily the responsibility of operations management.
F
Which of the following policies is a minimum standard for managing customer credit?
Filing suits and liens against the assets of customers who default on payment
The practice of purchasing and accepting delivery of inventory only after it has been sold to the final customer is termed as _____.
Just-in-time inventory
A long-term rental in which ownership of the asset never passes to the person paying for the lease is called a(n) _____ lease.
Operating
A(n) _____ is the amount of inventory that results in the minimum cost, considering the cost of lost sales resulting from running out of stock, the number of units sold per day, and the number of days required to receive inventory.
Optimum stocking level
Documenting the operations of your business, you must understand how three items relate to each other. Which of the items below is not one of those three related items?
Property
The practice of acquiring inventory only in response to a completed sale is called a(n) _____.
Pull-through system
Which of the following is an advantage to renting capital assets?
Renting usually protects you from unexpected costs of repairs.
The capital budgeting equation used to measure the relationship between initial investment and the profits that are expected to be received from making the investment is called _____.
Return on investment
A lease is simply a rental agreement that specifies a minimum period of time for which one must make rental payments.
T
All capital assets cause you to incur four costs over time: (1) the cost of acquiring the asset, (2) the cost of owning the asset, (3) the cost of operating the asset, and (4) the cost of disposing of the asset.
T
An arm's length transaction is a business deal where the parties have a prior relation or affiliation, but where the business is conducted as if they were unrelated.
T
Intangibility, inseparability, and perishability are the three characteristics of services that impact operations choices and decision making.
T
One of the policies for managing customer credit requires business owners to maintain constant "aging" of accounts to quickly identify customers who become delinquent.
T
The time value of money is the concept that a dollar received today is worth much more than is a dollar to be received at some time in the future.
T
The total cost of keeping inventory is the sum of the cost to buy the inventory, the cost to store, protect, and maintain inventory, and the cost of making an order to purchase inventory.
T
Which of the following is not a benefit of correctly documenting your business processes?
The process is self-sufficient and does not require much time to review or update.
Which of the following is one of the disadvantages of the return on investment (ROI) analysis?
The profits received are not the same as cash.
A just-in-time (JIT) inventory system attempts to reduce inventory levels to the absolute minimum by:
assembling the product in the absolute minimum time possible.
Operations management is primarily concerned with:
directing and controlling.
Small businesses use the periodic inventory method because it:
meets the requirements of local and federal taxing agencies.
Economic order quantity (EOQ) helps a business to think in terms of:
ordering costs and carrying costs.
An ideal situation is where a business receives new inventory just as the last unit of the previous order is sold. However, this rarely occurs because the:
sales volumes are not constant.
