Exam 27: Lean Manufacturing and Activity Analysis

From the provided schedule of activity costs, determine the (a) value-added and (b) non-value-added costs.

Lean manufacturing is also called make to stock manufacturing.

Kwanika Co. operates in a lean manufacturing environment. During its first year of operations, Kwanika budgeted for 40,000 hours in the production of 100,000 units in its Cell X-22. Materials costs were $7.00 per unit. Cell X-22 conversion costs were budgeted for the year as follows: During January, materials for 8,400 units were purchased on account. There were 8,200 units manufactured and 8,000 were sold and shipped to customers for $35 each. Conversion costs are applied based on units of production. Journalize (a) the materials purchases, (b) the application of conversion costs, (c) the transfer from work in process to finished goods, and (d) the sales (all made on account) and associated cost of goods sold for the month of January.

A quality control activity analysis indicated the following four activity costs of a hotel. Sales are $750,000 for the year. Prepare a cost of quality report.

Peters Manufacturing Co. operates in a lean manufacturing environment. The company had scheduled production of 95,000 units during February in its Y12 cell. Actual February production totaled 88,200 units. Peters had budgeted conversion costs for February totaling $900,000 and budgeted production hours totaling 2,000. Conversion costs are applied based on units of production.​ Compute Peters' cell conversion cost rate for Cell Y12. Round to the nearest cent.

Setup time is disregarded as an improvement priority under _____ manufacturing principles.

In a lean accounting system, there are more transactions to record than there are in a traditional accounting system.

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

In a pull manufacturing system, production is based on estimated customer demand.

Which of the following underlying problems may be hidden by high raw materials, work in process, and finished goods inventory levels?

Kilbuck Company operates in a lean manufacturing environment. Kilbuck applies conversion costs at a rate of $25 per unit. Kilbuck produced 12,000 units during May. Kilbuck's actual conversion costs for the month of May were: The journal entry to record applied conversion costs for May will include a

Schedule of Activity Costs ​ -Which of the following is not a prevention cost?

Reducing wait time is not linked to reducing inventory.

In a lean environment, the journal entry to record conversion costs would include a debit to the raw and in process inventory account.

Axelgold Company produces parts for the auto industry. Part X2 is machined in Department 1, which has the following budgeted conversion costs: All costs are driven by machine hours. Total planned hours for the year are 2,800. It takes 0.03 hour to machine one unit of Part X2.

Match each of the following quality control activities with the appropriate classification (a or b). -Disposing of scrap material A)Value-added B)Non-value-added

Match each of the following activities with the appropriate quality cost classification (a-d). -Performing warranty work A)Prevention cost B)Appraisal cost C)Internal failure cost D)External failure cost

The cell conversion cost rate includes which of the following?

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

Lean practices and activity analyses are not suitable for adaptation to service businesses or administrative processes.