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# Management Accounting: Concepts, Techniques & Controversial Issues Chapter 3 Extra MC Solution

James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

1. Using the terminology of statistical control, the variation within a stable system

e. all of the above.

2. Using the terminology of statistical control, the variation outside the control limits on an X-bar or range chart

d. b and c.

3. One type of error a manager can make is to blame a worker for an undesirable variation that is caused by the system. Refer to this as a type I error. Another type of error a manager can make is to blame the system when a worker caused the undesirable variation. Refer to this as a type II error. If a company changed the basis for the upper and lower limits on a control chart from three standard deviations to two standard deviations

a. the number of type I errors would increase.

4. One type of error a manager can make is to blame a worker for an undesirable variation that is caused by the system. Refer to this as a type I error. Another type of error a manager can make is to blame the system when a worker caused the undesirable variation. Refer to this as a type II error. If a company changed the basis for the upper and lower limits on a control chart from two standard deviations to three standard deviations

b. the number of type II errors would increase.

5. Using the terminology associated with statistical process control (SPC), the variation within a stable system is

e. a and c.

6. Using the terminology associated with SPC, the variations resulting from common causes are attributed to

b. an in control situation which should not be investigated.

7. Using the terminology of statistical process control, a variation caused by the system is

a. common cause variation.

8. Using the terminology of statistical process control, a variation that indicates that the system may be out of control is

e. b. and c.

9. Using the terminology of statistical process control (SPC), Type I errors are where common cause variation is treated as assignable cause variation. Type II errors are where assignable cause variation is treated as common cause variation. Which of the situations below would minimize type II errors?

d. Use budget comparisons against actual results without using the concept of SPC.

10. Which of the situations below would minimize type I errors?

a. Use SPC charts where the limits are based on 3 standard deviations.

11. Using the terminology of statistical process control (SPC), a stable system is

d. b and c.

12. In general, finding and correcting an assignable cause variation

b. returns the system from an unstable to a stable state.

13. Conceptually, control requires

e. b. and c.

14. Statistically, an improvement in a system is defined as

d. a and b.

15. When using the SPC methodology, a system is said to be stable when

c. the mean and range of variation caused by the system are predictable.

16. When using a statistical control chart (SPC), a point outside the control limits is attributed to

b. assignable or special causes.

17. A predictable range of variation in the output of a particular worker occurs on a routine basis. This variation represents

a. common cause variation and is uncontrollable.

Chapter 3 Extra MC Questions