Exam 27: Lean Principles, Lean Accounting, and Activity Analysis

Schedule of Activity Costs Quality Control Activities Activity Cost Frocess audits \ 50,000 Training of machine operators 28,000 Frocessing returned products 19,000 Scrap processing disposal) 25,000 Rework 8,000 Freventative maintenance 30,000 Froduct design 46,000 Warranty work 12,000 Finished goods inspection 23,000 -From the above schedule of activity costs, determine the internal failure costs.

Squirrel Co. operates in a lean manufacturing environment. For June production, Squirrel purchased 6,000 units of raw materials at $6.00 per unit on account. The journal entry required to record this transaction is:

Schedule of Activity Costs Quality Control Activities Activity Cost Product testing \ 55,000 Assessing vendor quality 26,000 Recalls 18,000 Rework 29,000 Scrap disposal 8,000 Product design 30,000 Training machine operators 46,000 Warranty work 12,000 Process audits 22,000 -Connally Company's payroll department required that every time card be checked twice to ensure pay accuracy. The company has 1,000 employees and has determined that the checks cost the company $8,000 per year. They have decided to change this policy and only check those names which appear on the exceptions report and a random check on the entire payroll. Currently only 15% of the payroll is evaluated each payroll. Determine the inspection activity cost per employee on the 1,000 employees both before and after the improvement.

Identity the following by their type of quality cost. -Operator training

Schedule of Activity Costs Quality Control Activities Activity Cost Product testing \ 55,000 Assessing vendor quality 26,000 Recalls 18,000 Rework 29,000 Scrap disposal 8,000 Product design 30,000 Training machine operators 46,000 Warranty work 12,000 Process audits 22,000 -From the above schedule, calculate the a) value-added and b) non-value-added costs.

The budgeted cell conversion cost rate includes which of the following?

In a lean environment, process problems are more visible than they are in a traditional environment because:

Alaskan Pattern Company makes dressmakers' patterns using a machine that stamps the pattern outline onto tissue paper. The stamping center produced 40,000 patterns in August, with a machine time per pattern of 20 seconds. Annual budgeted cell conversion costs were as follows: Maintenance and supplies \ 1,650,000 Depreciation 700,000 Supporting labor 825,000 Total \3 ,175,000 Alaskan planned 2,500 total machine hours for the year. Calculate Alaskan's budgeted cell conversion cost rate for the year.

Inventory reduction is a principle.

Which of the following is considered non-value-added lead time?

Financial accounting information is used more often for long-term operating decisions and nonfinancial information is used more often for day-to-day decisions.

Identify the following quality control activities as either value-added or non-value-added. -Preventive machine maintenance

A setup is the time required to prepare an operation for a new production run.

Identify the following quality control activities as either value-added or non-value-added. -Materials inspection

Under the lean production concept, employees are better utilized if they are experts in one operation rather than wasting time training them to learn various production operations.

In a lean environment, raw materials are delivered less frequently than in a traditional environment.

Costs of controlling quality include prevention costs and internal failure costs.

Employee involvement in a product-oriented factory emphasizes employee teams, rather than individual employees.

Identity the following by their type of quality cost. -Warranty work

Which of the following statements best describes the relationship among the costs of quality?