Operations Management

Question 1

Breakeven Point

Answer 1

Fixed Costs/Contribution Margin Ratio

Question 2

T/F: Under direct costing, fixed overhead costs are treated as period costs (i.e. expensed).

Answer 2

TRUE

Question 3

Prime Costs

Answer 3

Direct materials and labor grouped together

Question 4

Conversion Costs

Answer 4

Direct labor and factory overhead

Question 5

4 Types of Variances

Answer 5

Price, usage, rate & efficiency

Question 6

BPM Life Cycle components

Answer 6

1. Design
2. Model
3. Execute
4. Monitor
5. Optimize

Question 7

Reorder Point is the product of what two things?

Answer 7

Usage per day x Lead Time

Question 8

Cost of Goods Manufactured

Answer 8

COGM = Beginning WIP Inventory + total manufacturing costs - Ending WIP Inventory

Question 9

Replenishment Point

Answer 9

Avg usage x Lead time + Safety Stocl

Question 10

Margin of Safety equals sales minus what?

Answer 10

Breakeven Sales

Question 11

The labor efficiency (usage) variance is the difference between

Answer 11

Standard cost of actual hours and the standard cost of budgeted hours

Question 12

Production Volume Variance is the product of the fixed overhead rate and what?

Answer 12

Budgeted - Actual Units

Question 13

Absorption costing treats all manufacturing (variable and fixed) costs as what?

Answer 13

PRODUCT COSTS

Question 14

Std Price (Sq-Aq)

Answer 14

Usage Variance

Question 15

Actual Quantity (Sp-Ap)

Answer 15

Price Variance

Question 16

In allocating service department costs to the operating departments, for which of the following three methods (direct, step-down, and reciprocal) does the order in which the departments are allocated NOT affect the amount allocated to each department?

Answer 16

Direct and reciprocal methods