Chapter 14-4

Question 1

costs that, if eliminated, would reduce the actual or perceived value or utility customers experience from using the product or service

Answer 1

value added costs
(reliability, adequate memory, preloaded software)

Question 2

costs that, if eliminated, would not reduce the actual or perceived value or utility customers gain from using the product or service

Answer 2

non value added costs
(costs of defective products, machine breakdowns)

Question 3

managers need to apply ______ costs as value added or non value added, as some costs have both components

Answer 3

judgment to classify

Question 4

describes when a resource is consumed or a benefit is forgone to meet a specific objective

Answer 4

cost incurrence
(recognizing direct materials costs when a product is assembled and sold)

Question 5

costs that have not yet been incurred but will be incurred in the future based on decisions already made

Answer 5

locked in costs

Question 6

product _______ can lock in a significant portion of the unit cost early in the process

Answer 6

design decision

Question 7

reduces both value added and non value added costs by simplifying design and reducing direct materials, labor hours, components, and testing hours

Answer 7

value engineering

Question 8

5 step decision making process

Answer 8

1. identify the problem
2. obtain information
3. make predictions about the future
4. make decision by choosing among alternatives
5. implement the decision evaluate performance and learn

Question 9

managers use _____ to reduce the time it takes to complete a task, eliminate waste, and improve operating efficiency and productivity

Answer 9

kaizen, or continuous improvement

Question 10

1. understanding customer requirements and value added and non value added costs
2. anticipating how costs are locked in before they are incurred
3. using corss functional teams to redesign products and processes to reduce costs while meeting customer needs

Answer 10

key steps in value engineering