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

Accounting for lean operations requires fewer transactions because

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 external failure costs.

Costs of failing to control quality include prevention costs and external failure costs.

Conan Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates only to one customer's lean cell. For the year, planned labor and overhead was $80,000,000; materials costs, $25 per unit. Planned production included 9,600 hours to produce 76,800 motor drives. Actual production for the month of August was 5,200 units, and motor drives shipped amounted to 5,040 units. From the foregoing information, determine the budgeted cell conversion cost per hour.

Lean manufacturing is also called make-to-stock manufacturing.

Which of the following drives work-in-process inventory levels higher?

The Bright Lamp Company has budgeted its conversion cost for the small lamp production as $85,000 for 1,300 production hours. Each unit produced by the cell requires 15 minutes of process time. During the month, 3,800 units are manufactured in the cell. The estimated material cost is $18 per unit. Provide the following journal entries. a) Materials are purchased to produce 4,000 units. b) Conversion costs are applied to 3,800 units of production. Please round to nearest cent.)c) 3,650 units are placed into finished goods.

Long setups and large batch sizes result in smaller inventories.

In a lean environment, the journal entry to record conversion costs would include a debit to the manufacturing overhead control account.

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

Extreme Wreaths, Inc. makes wreaths in batch sizes of 15 at a time. The cutting & assembly process takes 10 minutes per wreath, and the decorating process time is 7 minutes per wreath. It takes 5 minutes to move the wreaths from the cutting & assembly process to the decorating process. In a effort to improve the lead time, the company has tried reducing the batch size to 10 units. The new process is as follows: cutting & assembly process - 8 minutes. The decorating process is still 7 minutes per wreath. It takes 5 minutes to move the wreaths from the cutting & assembly process to the decorating process. a) Compute the value-added, non-value-added, and the total lead time of the wreath process for both the old and the new manufacturing process. b) Compute the value-added ratio for both the old and new process. Round to the nearest decimal.

From the foregoing information, determine the amount of the conversion costs charged to Raw and In Process Inventory during August.

Push manufacturing is also referred to as make-to-order processing.

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 external failure costs.

In a pull manufacturing system, raw materials are released to production based on actual customer orders.

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 -A quality control activity analysis indicated the following four activity costs of a hotel.

In a lean system, indirect labor is traced directly to product cells.

Reducing wait time is not linked to reducing inventory.

Lean manufacturing favors organizing work around processes rather than around products.

Under a lean environment, employees have the responsibility and authority to