Unit 5: Project Planning - Practice Quiz

1 What is the primary purpose of enterprise planning?

2 What does project identification mainly involve?

3 Which factor is most important when selecting a business project?

4 What is a project report?

5 Enterprise management mainly involves which activity?

6 In marketing and production, what is a product?

7 Which product level represents the basic benefit sought by a customer?

8 What is a product mix?

9 What is the main aim of quality control?

10 Which of the following is a cost of production?

11 What is the purpose of production control?

12 Material management is concerned with which activity?

13 Under the FIFO method of raw material costing, which materials are issued first?

14 What is the main objective of inventory control?

15 What does manpower planning determine?

16 What does labour turnover measure?

17 Which statement correctly distinguishes wages from salaries?

18 Which section of a project report estimates expected income and expenses?

19 What is a reorder level?

20 What does the width of a product mix refer to?

21 A small enterprise plans to produce eco-friendly packaging. Which activity should be completed first to reduce the risk of starting without adequate demand information?

22 A district has abundant fruit production but large quantities spoil because processing facilities are limited. Which project idea is most directly identified from this situation?

23 Two projects have similar expected profits, but one requires less water in a water-scarce region. Which criterion should influence the project selection most strongly?

24 Which section of a project report would normally explain the estimated sales volume, target customers, and expected selling price?

25 A manager delegates purchasing authority to a supervisor but requires monthly reports on spending. Which management principle is illustrated?

26 A manufacturer changes the handle of a kitchen tool to make it safer and easier to use. Which product decision is being emphasized?

27 A customer buys a washing machine mainly to save time and reduce household effort. At which product level is this benefit primarily represented?

28 A company sells tea, coffee, and fruit juice. It adds herbal tea under its existing tea line. What has primarily increased?

29 A factory checks the diameter of every tenth component during production and stops the line when measurements exceed limits. What is the main purpose of this activity?

30 A unit incurs direct materials of $40, direct labour of $25, and factory overhead of $15. What is its total production cost?

31 A production schedule requires 500 units to be completed by Friday, but only 300 units are finished by Wednesday. Which control action is most appropriate?

32 A purchase department groups similar materials, standardizes specifications, and negotiates bulk orders. Which material-management objective is most directly supported?

33 A batch uses 200 kg of raw material at $6 per kg and incurs $120 in freight. What is the raw material cost of the batch?

34 A store uses 50 units per day, and supplier delivery takes 6 days. Ignoring safety stock, what reorder level is appropriate?

35 A firm expects to expand from 40 to 55 employees next year and anticipates five retirements. How many additional employees must it plan to recruit?

36 A company had an average workforce of 200 employees during the year, and 24 employees left. Using the separation method, what was the labour turnover rate?

37 A worker is paid $18 per hour and works 42 hours in a week. If overtime is paid at 1.5 times the normal rate for hours above 40, what is the weekly wage?

38 A project report shows strong demand but negative cash flows during the first six months. Which part of the report should explain how these temporary shortages will be financed?

39 A company records customer complaints, identifies that most defects originate from one machine, and adjusts that machine. Which approach is being used?

40 An item has annual demand of 2,400 units, ordering cost of $50 per order, and holding cost of $2 per unit per year. Using , what is the approximate economic order quantity?

41 An entrepreneur is choosing among three mutually exclusive plant sizes. Estimated project payoffs are shown below in thousands of monetary units.

| Plant | Low demand, | High demand, |
|---|---:|---:|
| Small | | |
| Medium | | |
| Large | | |

Financing is available only for a plant whose payoff is non-negative under every demand state. Which plant should be selected by maximizing expected monetary value among eligible alternatives?

42 Four project ideas are scored from to on market potential, technical feasibility, social benefit, and implementation risk. The respective weights are , , , and . Because a higher risk score is undesirable, the weighted score is calculated as market plus technical plus social minus risk. Which idea ranks first?

| Idea | Market | Technical | Social | Risk |
|---|---:|---:|---:|---:|
| A | | | | |
| B | | | | |
| C | | | | |
| D | | | | |

43 A project requires an initial investment of thousand. It will generate thousand at the end of each of the next three years and an additional salvage value of thousand at the end of year 3. At a discount rate of , what is the project's approximate net present value?

44 A proposed project expects annual sales of units at per unit, variable cost of per unit, and fixed cost of . In a combined adverse scenario, sales volume falls by and selling price falls by , while unit variable cost and fixed cost remain unchanged. What annual operating result should the formulation report?

45 A project report uses a 360-day year and estimates annual raw-material cost of million and annual conversion cost of million. Raw materials remain in stores for 30 days. Work in progress averages 15 days and contains all raw material but only of conversion cost. Finished goods remain for 20 days, receivables for 45 days, and raw-material suppliers allow 25 days of credit. Receivables are valued at production cost, and no cash reserve is required. What is the estimated net working-capital requirement?

46 A founder has delegated purchasing authority up to approved budget limits but continues to override routine orders. Purchases are delayed, while the founder lacks time to investigate major cost variances. Which management intervention best restores effective delegation without weakening control?

47 A firm expects a new product to sell units with contribution of per unit. Thirty percent of these sales will replace sales of an existing product that earns contribution of per unit. The new product also requires an annual product-specific fixed cost of . What is the correct launch decision based on incremental annual profit?

48 A smartphone producer wants to strengthen the augmented product while leaving the core benefit and actual product unchanged. Which action best meets this objective?

49 Products P and Q contribute and per unit, respectively. Each unit of P requires 2 machine hours and 1 labour hour; each unit of Q requires 1 machine hour and 2 labour hours. Weekly capacity is 100 machine hours and 80 labour hours. Assuming divisible production and unlimited demand, which product mix maximizes contribution?

50 A stable process historically has a defective proportion of . In a sample of 200 units, 18 are defective. Using three-sigma limits for a -chart and assuming no other non-random pattern, what conclusion is appropriate?

51 An acceptance-sampling plan inspects 10 units and accepts the lot only if no defective unit is found. If a lot at the acceptable quality level contains defective units and sampling is approximated as independent, what is the producer's risk?

52 A factory has idle capacity and receives a one-time order for units at each. Variable manufacturing cost is per unit, special packaging costs per unit, and a dedicated setup costs . Allocated fixed overhead of per unit will not change. What is the relevant-cost decision?

53 A production controller uses the critical ratio . Four jobs have the following values: A has 8 days until due and 4 days of work; B has 6 and 5; C has 3 and 4; D has 2 and 1. Which job requires the most urgent corrective attention?

54 Annual demand is units, ordering cost is per order, and annual holding cost is of purchase price. The price is per unit for orders below units and for orders of at least units. Assuming instantaneous replenishment and no shortages, which order quantity minimizes total annual cost?

55 Under a perpetual weighted-average system, inventory transactions are: opening inventory 100 kg at ; purchase 200 kg at ; issue 150 kg; purchase 100 kg at ; and issue 100 kg. What are the total cost of materials issued and the closing inventory value?

56 Daily demand is normally distributed with mean 50 units and standard deviation 8 units. Lead time is fixed at 4 days, demands on different days are independent, and the desired cycle-service level corresponds to . What reorder point should be used, rounded up to a whole unit?

57 A firm currently has 200 skilled employees. By next year, are expected to remain skilled, will be promoted out of the grade, and will leave. Of 20 eligible junior employees, half are expected to qualify for promotion into the skilled grade. Only of external recruits are expected to complete training. To have at least 190 skilled employees next year, what is the minimum number of external recruits?

58 A business begins the year with 400 employees and ends with 440. During the year, 42 employees separate, 82 are recruited, and 30 of the recruits specifically replace separated employees. Using average employment as the denominator, which set correctly gives the separation, replacement, and flux turnover rates?

59 Under the Rowan incentive plan, the standard time for a job is 10 hours, actual time is 6 hours, and the hourly wage rate is . What are the worker's total earnings and effective hourly earnings?

60 A firm has a capital budget of thousand. The following independent projects are indivisible and may be undertaken only once.

| Project | Initial outlay | NPV |
|---|---:|---:|
| A | | |
| B | | |
| C | | |
| D | | |

Which feasible portfolio maximizes total NPV?