IMANET IMANET Certifications IMANET-CMA Questions & Answers

• Question 1251:

  A TOC analysis would recommend that Bombastic Bathrooms expend its limited resources mainly to produce which a fixture?

  A. Brass.

  B. Chrome.

  C. Nickel.

  D. Aluminum.

  Correct Answer: C

  Under a theory of constraints analysis, the product with the greatest absolute throughput margin is not of the highest interest. Bottlenecks hold up production, so no matter how great the margin on a product is, if it cannot get through the production process, it cannot earn that margin. The relevant figure is throughput margin per time spent in the constraint. In Bombastic case, the most profitable product using this metric is the nickel fixture ($180?4 hours = $45).

• Question 1252:

  Bombastic Bathrooms manufacturers a certain style of plumbing fixture in four materials. Price and cost data for each are given below:

  

  The constraint in Bombastic manufacturing process is the

  A. Boring department.

  B. Machining department.

  C. Finishing department.

  D. Inspection and packing activity.

  Correct Answer: B

  The constraint is the part of a process that holds up the rest of the process. Since Bombastic Bathrooms is producing equal quantities of the four fixtures, the machining department is the bottleneck. It requires a total of 19 hours for one of each model to move through. The boring department requires 18, finishing 11, and inspection and packing 4.

• Question 1253:

  The margin amounts of interest to Bombastic Bathrooms at the start of theory' of constraints (TOC) analysis are, respectively,

  A. $150, $115, $260, $265.

  B. $150, $130, $180, $190.

  C. $80, $60, $110, $120.

  D. $50$25,$65,$55.

  Correct Answer: B

  A theory of constraints (TOO) analysis proceeds from the assumption that only direct materials costs are truly variable in the short run. This is called throughput, or super variable, costing. The relevant margin amount is throughput margin, which equals price minus direct materials. Thus, margin figures of interest to Bombastic Bathrooms are $150 for brass ($250 --$100), $130 for chrome ($220 --$90), $180 for nickel ($375-- $195), and $190 for aluminum ($400 --$210).

• Question 1254:

  The following steps make up the stages of a theory of constraints (TOO) analysis.

  I. Determine the most profitable product mix given the constraint.

  II. Increase capacity at the constraint. Ill. Dentin the constraint.

  IV.

  Redesign the manufacturing process.

  V.

  Maximize the flow through the constraint.

  If executed in the correct order, the sequence is

  A. lll,lIl,V,IV.

  B. Ill, II, I, V, IV.

  C. III, II, I, IV, V.

  D. III, I, V, II, IV.

  Correct Answer: D

  The steps in a TOO analysis are (1) dentist the constraint, (2) determine the most profitable product mix given the constraint, (3) maximize the flow through the constraint, (4) increase capacity at the constraint, [nod (5) redesign the manufacturing process for greater flexibility and speed.

• Question 1255:

  The process model used in a theory of constraints (TOO) analysis is called

  A. Just-in-time.

  B. Drum-buffer-rope.

  C. Materials requirements planning.

  D. Lean production.

  Correct Answer: B

  Production flow through a constraint is managed using the drum-buffer-rope (DBR) system. The drum (i.e., the beat to which a production process marches) is the bottleneck operation. The constraint sets the pace for the entire process. The buffer is a minimal amount of work-in-process input to the drum that is maintained to ensure that it is always in operation. The rope is the sequence of activities preceding and including the bottleneck operation that must be coordinated to avoid inventory buildup.

• Question 1256:

  Wiich pairs of systems are considered corrIementary because they inherently focus on andfferent time frames Short-term Long-term

  A. Operation costing Theoryotconslranis

  B. Active*flasedcosbng Theoryotconstrr(s

  C. Theoryotconslrarts Operaboncosting

  D. Theoryctcons#air(s Acti%c.besedcosbng

  Correct Answer: D

  Theory of constraints (TOC) has a short-term focus based on costs of arterials and product raw; activity-based costing has a long-term locus which considers al predict costs and is concerned with strategic pricing and profit plan rang

• Question 1257:

  In a theory of constraints (TOO) analysis, the bottleneck operation (the constraint) corresponds to which part of the drum- buffer-rope model?

  A. Drum.

  B. Buffer.

  C. Rope.

  D. No part of TOO analysis corresponds to the drum-buffer-rope model.

  Correct Answer: A

  Production flow through a constraint is managed using the drum-buffer-rope (DBR) system. The drum (i.e., the beat to which a production process marches) is the bottleneck operation. The constraint sets the pace forth entire process. The buffer is a minimal amount of work-in-process input to the drum that is maintained to ensure that it is always in operation. The rope is the sequence of activities preceding and including the bottleneck operation that must be coordinated to avoid inventory buildup.

• Question 1258:

  Rosecrans Manufacturing produces kerosene lanterns. The company can sell all of its output. Each unit sells for $120. and direct materials costing $48 per unit are added at the start of the first operation. Other variable costs are immaterial. Production data for one of its products is presented below:

  

  Operation 1 produces 500 unsolvable units and Operation 2 also produces 500 unsolvable units. The relevant cost of the unsolvable units to Rosecrans is

  A. $24,000

  B. $60,000

  C. $84,000

  D. $120000

  Correct Answer: C

  The cost of the unsolvable units in Operation 1 consists solely of the wasted direct materials because idle capacity is available to replace the defective units. As a consequence, Operation 1 can still transfer the maximum 150,000 units that Operation 2 can process, and no throughput contribution is lost. The cost of the unsolvable units in Operation 1 is thus $24000 (500 units x $48 DM). In Operation 2, however, the lost throughput contribution is an opportunely cost because no idle capacity exists to replace the defective units. The cost of the unsolvable units in Operation 2 is $60,000 {(500 units x $48 DM) + [500 units x ($120 unit price --$48 DM cost)]}. Hence, the total relevant cost of the unsolvable units is $84,000 ($24,000 + $60,000). [

• Question 1259:

  Rosecrans Manufacturing produces kerosene lanterns. The company can sell all of its output. Each unit sells for $120. and direct materials costing $48 per unit are added at the start of the first operation. Other variable costs are immaterial. Production data for one of its products is presented below:

  

  Tullahoma Company has offered to perform the Operation 2 function on 1,000 units at a unit price of $40, excluding direct materials cost. Chattanooga Company has offered to perform the Operation 1 function on 11000 units at a price of $7, excluding direct materials cost. Chickamauga Company has made an offer to perform the Operation 1 function on 5,000 units at a unit cost of $5 (excluding direct materials cost). Which of these mutually exclusive offers is acceptable to Rosecrans?

  A. Tullahoma's offer.

  B. Chattanooga's offer.

  C. Chickamauga's offer.

  D. None of the offers should be accepted.

  Correct Answer: A

  Tullahoma's offer should be accepted because its cost is $40,000 (1,000 units x $40), and the increase in throughput contribution is $72,000 [1,000 units x ($120 unit price--$48 DM per unit)]. Hence, the relevant cost of Tullahoma's offer is less than the incremental throughput contributed. Tullahoma's offer effectively increases the capacity of the bottleneck operation. Chattanooga's and Chickamauga's offers should both be

• Question 1260:

  Rosecrans Manufacturing produces kerosene lanterns. The Company can sell all of its output. Each unit sells for $120,and direct materials costing $48 per unit are added at the start of the frit operation. Other variable caste are immaterial. Production data for one of one of its products is presented below:

  

  Rosecrans hires additional workers at a cost of $500,000 per year to expedite setups and materials handling in the bottleneck operation .As a result, the annual output of the bottleneck operation increases by 500 units. The Change in operating income Attributable to the increase in workers is

  A. $50,000

  B. $36,000

  C. $(14,000)

  D. $(20,000)

  Correct Answer: C

  Operation 2 is the bottleneck because it is functioning at its Capacity. The incremental annual throughput contribution (revenues- direct materials costs) from adding working to Operation 2 is $36.000[500 units* ($120 unit price-$48 DM per unit)] Because the cost of the additional workers is $50,000, the change in Operating income is $(14,000).