Multiple Choice

Select the best answer to each question. Space is provided for computations after the quantitative questions.

___1. Brand loyalty is associated closely with:

a. cost leadership but not product differentiation.

b. product differentiation but not cost leadership.

c. both cost leadership and product differentiation.

d. neither cost leadership nor product differentiation.

____2. The percentage of manufacturing processes with real-time feedback is a performance measure under which perspective in the balanced scorecard?

a. Financial perspective

b. Customer perspective

c. Internal business process perspective

d. Learning and growth perspective

____ 3. Reengineering relates to which perspective in the balanced scorecard?

a. Financial perspective

b. Customer perspective

c. Internal business process perspective

d. Learning and growth perspective

____4. In analyzing the change in a companys operating income from one year to the next, which effect(s) is computed for the price-recovery component?

Revenue Effect

Cost Effect

a.

Yes

Yes

b.

Yes

No

c.

No

Yes

d.

No

No

___5. Nesbitt Company analyzed the change in its operating income from 2010 to 2011 into three components as follows:

Growth component

$684,000 favorable

Price-recovery component

604,000 unfavorable

Productivity component

450,000 favorable

If operating income is $1,050,000 in 2011, operating income in 2010 is:

a. $212,000.

b. $520,000.

c. $1,580,000.

d. Cannot be determined from the information given.

___6. Drummond Enterprises had an increase in its operating income from 2010 to 2011 of $200,000. Two of the three factors accounting for the increase are:

Change due to cost leadership

$498,500 favorable

Change due to product differentiation

454,500 unfavorable

The third factor to complete this analysis is:

a. Change due to a strategic decision that affected selling price, $156,000 favorable.

b. Change due to a strategic decision that affected selling price, $156,000 unfavorable.

c. Change due to industry market size, $156,000 favorable.

d. Change due to input prices, $156,000 favorable.

___ 7. (Appendix, CMA) Fabro Inc. produced 1,500 units of Product RX-6 last week. The inputs for this production are:

450 pounds of Material A at a cost of $1.50 per pound

300 pounds of Material Z at a cost of $2.75 per pound

300 labor-hours at a cost of $15.00 per hour

The total factor productivity for Product RX-6 is:

a. 2.00 output units per pound.

b. 1.00 output unit per dollar of input costs.

c. 5.00 output units per hour.

d. 0.25 output units per dollar of input costs.

e. 0.33 output units per dollar of input costs.