Question

7. The term Six Sigma refers to:

Select one:

a. The control limits established in a Pareto-analysis chart.

b. A quality-performance standard that requires all products and services to meet the target value exactly, with no variation.

c. A business process-improvement approach that seeks to find and eliminate causes of defects and errors.

d. The quality expectation embodied in a robust-quality performance standard.

e. The quality requirement specified for ISO 9000 certification

8. A proper role for accounting in terms of managing and controlling quality is all of the followingexcept

Select one:

a. Providing management with relevant financial information for decisions related to quality-oriented initiatives

b. Providing management with relevant nonfinancial information for decisions related to quality-related initiatives

c. Specifying quality-related goals and objectives for the organization

d. Identifying operational constraints

e. Participating in the development of Six-Sigma quality-related goals

9. Which one of the following statements pertaining to the return on investment (ROI) as a divisional performance measure is incorrect?

Select one:

a. When the average age of assets differs substantially across divisions of a business the use of ROI may not be appropriate

b. ROI relies on financial measures that are capable of being independently verified while other forms of performance measures are subject to manipulation

c. The use of ROI may lead managers to reject capital investment projects that can be justified using discounted cash flow (DCF) models

d. The use of ROI can make it undesirable for a skillful manager to take on trouble-shooting assignments such as those involving turning around unprofitable divisions

e. The use of ROI can lead managers to emphasize the ROI of his/her division over the profitability of the organization as a whole

9. Assume that an organization's weighted-average cost of capital (minimum rate of return) is 8% and that Division A currently has a 12% return on investment (ROI). The manager of Department A, who is evaluated on the basis of divisional ROI, would most likely accept an investment that is expected to return:

Select one:

a. More than 8%

b. More than 12%

c. More than 8% but less than 12%

d. Less than 12%

e. Impossible to tell without further information

Answer 1

7) Solution: A business process-improvement approach that seeks to find and eliminate causes of defects and errors

Explanation: The term Six Sigma is defined as a process-improvement approach in business that targets to locate and eliminate causes of errors and defects.

　

8) Solution: Identifying operational constraints

Explanation: A proper role for accounting in terms of managing as well as controlling quality excludes the identification of operational constraints

　

9) Solution: ROI relies on financial measures that are capable of being independently verified while other forms of performance measures are subject to manipulation

Explanation: The return on investment assists managers to emphasize the ROI to determine the division over the profitability of the organization; and allows to reject capital investment projects which would be justified with usage of the discounted cash flow models

　

10) Solution: More than 12%

Explanation: A higher return on investment is likely to be accepted for investment