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Exam 15: Managing Suppliers and Customers

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Question 1

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Which of the following statements regarding the pull method is/are true? i. Goods are produced in each manufacturing stage only as they are needed at the next stage. ii. This method reduces work-in-process inventory. iii. This method reduces inventory handling and its associated non-value-added cost.

A) i and ii
B) i and iii
C) ii and iii
D) All of the given answers

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Question 2

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Identify and define the five core customer measures. To support your answer, provide an example for each core measure.

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The five core customer measures are customer satisfaction, customer loyalty, customer retention, customer advocacy, and customer lifetime value. 1. Customer satisfaction: This measures how satisfied a customer is with a product or service. For example, a customer satisfaction survey can be used to measure the level of satisfaction a customer has with a recent purchase. 2. Customer loyalty: This measures the likelihood of a customer to continue purchasing from a specific brand or company. For example, a customer who consistently chooses a particular airline for their travels demonstrates loyalty to that airline. 3. Customer retention: This measures the ability of a company to retain its customers over time. For example, a high customer retention rate indicates that a company is successful in keeping its customers coming back for repeat purchases. 4. Customer advocacy: This measures the likelihood of a customer to recommend a product or service to others. For example, a customer who actively promotes a specific brand or product to their friends and family is a strong advocate for that brand. 5. Customer lifetime value: This measures the total value a customer brings to a company over the entire duration of their relationship. For example, a customer who consistently makes large purchases and remains loyal to a company for many years has a high customer lifetime value.

Question 3

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The reason a just-in-time system focuses on the control of inventories is because:

Which of the following are customer costs at the customer level? i. Regular sales calls ii. Customer inquiries iii. Acceptance of sales order iv. Provision of samples to customers

Under a backflush costing system, the journal entry to purchase raw materials on account is:

If the total supplier activity costs were $74 000; price per unit was $1.70; and total units purchased were 12 000, the supplier performance index would be:

Strategic alliances are informal arrangements between two or more suppliers and customers relating to the supply of raw materials.

The following dates apply to a specific order processed by Hamilton Ltd: What is the customer response time?

An example of an ordering cost is:

GoGo Furniture needs to purchase glass panes to make glass top coffee tables. Last year GoGo Furniture has two suppliers, BolBol and TolTol. Based on last year's experience with these two suppliers, GoGo provides you with the following supplier related information: The total costs of ownership of BolBol and TolTol are, respectively:

The reorder point is calculated by:

Under a backflush costing system, conversion costs are:

Select the statement that best completes the following sentence for all possible scenarios: 'Considering the entire value chain is important for management accounting in today's competitive environment because ....'

Which of the following statements is/are correct? i. The economic order quantity determines the optimum order size for individual inventory items. ii. The economic order quantity cannot be used in a manufacturing organisation. iii. The economic order quantity minimises the sum of the ordering and carrying costs.

Which of the following is a likely cause for a longer-than-expected production lead time?

Organisations usually undertake a formal process to determine their preferred suppliers.

The advantage of a just-in-time (JIT) system is that there are huge savings in costs relating to the holding of inventory as JIT companies never hold inventories of any description.

GoGo Furniture has collected the following customer-related information: The total order level cost is:

The Wonderlust Retail Company Ltd experiences relatively constant demand of 24 000 units per year for one of its products. The product, a coffee-making machine, costs the firm $30. Placing an order costs $200 and annual carrying costs are $2 per unit. The firm works 200 days per year and desires a safety stock of 300 units. The lead time for an order is 15 working days. The economic order quantity for Wonderlust is:

Customer value is an important part of activity-based management and it enables an organisation to achieve both cost reduction and improved customer value through the use of which of the following? i. Identifying major opportunities for cost reduction. ii. Determining root causes of these costs. iii. Developing programs to eliminate the causes of these costs. iv. Introducing performance measures to monitor the effect of these programs.