Question 1

Which of the following is NOT a characteristic of just-in-time production?

Accepted Answer

A) "Demand-pull" system to initiate production 
B) Small, self-contained work cells 
C) Ultra-reliable suppliers 
D) Surplus stocks maintained to protect against supply interruption 
A) "Demand-pull" system to initiate production 
B) Small, self-contained work cells 
C) Ultra-reliable suppliers 
D) Surplus stocks maintained to protect against supply interruption

Question 2

Johnson Production Company uses just-in-time production and accounting methods. On June 1, Johnson paid direct labor costs of $5,000 in cash. Please provide the journal entry.

Accepted Answer

The answer of Johnson Production Company uses just-in-time production and...

Question 3

Activity-based costing focuses on a single predetermined overhead rate for cost analysis.

Accepted Answer

A) True 
 B)False

Question 4

Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology. At the beginning of January, selected account balances are shown in the T-accounts below.   During January, the following 5 transactions take place:
  Use the T-accounts shown above to record the transactions, and then answer the following question:
After transaction number 3, what was the balance in the Raw and in-process inventory account?

Accepted Answer

A) $40,000 
B) $76,000 
C) $67,000 
D) $42,000 
A) $40,000 
B) $76,000 
C) $67,000 
D) $42,000

Question 5

Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows:   What is the cost of assembling per ceiling fan?

Accepted Answer

A) $87.50 
B) $7.00 
C) $7.50 
D) $35.00 
A) $87.50 
B) $7.00 
C) $7.50 
D) $35.00

Question 6

Johnson Production Company uses just-in-time production and accounting methods. On June 1, Johnson purchased $4,000 of raw materials on account. Which of the following journal entries correctly records this transaction?

Accepted Answer

A) Debit accounts payable for $4,000, credit Raw and in-process inventory for $4,000. 
B) Debit $4,000 to Materials inventory, credit $4,000 to Accounts payable. 
C) Debit $4,000 to Work in process inventory, credit $4,000 to Accounts payable. 
D) Debit $4,000 to Raw and in-process inventory, credit $4,000 to Accounts payable. 
A) Debit accounts payable for $4,000, credit Raw and in-process inventory for $4,000. 
B) Debit $4,000 to Materials inventory, credit $4,000 to Accounts payable. 
C) Debit $4,000 to Work in process inventory, credit $4,000 to Accounts payable. 
D) Debit $4,000 to Raw and in-process inventory, credit $4,000 to Accounts payable.

Question 7

Which of the following pertains to a just-in-time production system?

Accepted Answer

A) It will have more inventory accounts to track production costs. 
B) It will produce goods in smaller batches than a traditional production system. 
C) It will require higher inventory levels. 
D) It will require longer setup times than a traditional production system. 
A) It will have more inventory accounts to track production costs. 
B) It will produce goods in smaller batches than a traditional production system. 
C) It will require higher inventory levels. 
D) It will require longer setup times than a traditional production system.

Question 8

An activity-based costing system can be a significant competitive advantage for a business which does bidding for manufacturing work.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following pertains to a just-in-time production system?

Accepted Answer

A) Direct materials and work in process are combined into a conversion inventory account. 
B) Direct materials and work in process are combined into a raw and in process inventory account. 
C) Work in process and conversion costs are combined into a raw and in process inventory account. 
D) Direct materials and conversion costs are combined into a raw and in process inventory account. 
A) Direct materials and work in process are combined into a conversion inventory account. 
B) Direct materials and work in process are combined into a raw and in process inventory account. 
C) Work in process and conversion costs are combined into a raw and in process inventory account. 
D) Direct materials and conversion costs are combined into a raw and in process inventory account.

Question 10

Nirvana Products Company has just gone through a rigorous evaluation due to sliding profits in the past year. The engineers strongly recommend implementing an aggressive preventative maintenance program, but the accountants say it will cost $50,000. The lawyers insist on a zero-defect product inspection as the units are being packaged, but the accountants say it will cost $40,000. The vice president for production said he just thought it was too expensive of a gamble to take, but the factory manager pointed out that if they did not look ahead at the consequences, they could easily lose $100,000 of sales to their competitors because of shoddy goods, and a costly production shutdown that would cost them another $100,000 if the machinery gives out unexpectedly.
In this situation, the company should not invest in the quality programs being recommended because they are not justified on a cost/benefit basis.

Accepted Answer

A) True 
 B)False

Question 11

Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology. At the beginning of January, selected account balances are shown in the T-accounts below.   During January, the following 5 transactions take place:
  Use the T-accounts shown above to record the transactions, and then answer the following question:
After transaction number 3, what was the balance in the Conversion costs account?

Accepted Answer

A) $29,000 
B) $74,000 
C) $34,000 
D) $25,000 
A) $29,000 
B) $74,000 
C) $34,000 
D) $25,000

Question 12

Pollenti Company has just merged with another industrial firm whose business had been failing. Pollenti immediately conducted a thorough study of the new company's work processes, and produced a report including the data shown below: • A new inspection process is recommended to minimize defective raw materials. It would cost $12,000 to implement.
• Shoddy business practices are resulting in excessive warranty costs$15,000 more than normal due mainly to material failure.
• Reengineering of the assembly line will increase productivity. It would cost $18,000 to implement.
• Inefficient workplace design is costing $5,000 in unnecessary rework costs.
• Estimated amount of lost profits due to dissatisfied customers who turn to the competition is $80,000.
Based on the above, what is the amount of internal failure costs, if any, included here?

Accepted Answer

A) $5,000 
B) $12,000 
C) $15,000 
D) Zero 
A) $5,000 
B) $12,000 
C) $15,000 
D) Zero

Question 13

Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology. At the beginning of January, selected account balances are shown in the T-accounts below.   During January, the following 5 transactions take place:
  Use the T-accounts shown above to record the transactions, and then answer the following question:
After transaction number 5, what was the balance in the Finished goods inventory account?

Accepted Answer

A) $3,900 
B) $7,400 
C) $13,900 
D) $6,900 
A) $3,900 
B) $7,400 
C) $13,900 
D) $6,900

Question 14

Value engineering requires the collaboration of marketing, engineering and accounting personnel to achieve the optimum results.

Accepted Answer

A) True 
 B)False

Question 15

Losses caused by downtime in the production process are considered a(n):

Accepted Answer

A) external failure cost. 
B) prevention cost. 
C) appraisal cost. 
D) internal failure cost. 
A) external failure cost. 
B) prevention cost. 
C) appraisal cost. 
D) internal failure cost.

Question 16

Pollenti Company has just merged with another industrial firm whose business had been failing. Pollenti immediately conducted a thorough study of the new company's work processes, and produced a report including the data shown below: • A new inspection process is recommended to minimize defective raw materials. It would cost $12,000 to implement.
• Shoddy business practices are resulting in excessive warranty costs$15,000 more than normal due mainly to material failure.
• Reengineering of the assembly line will increase productivity. It would cost $18,000 to implement.
• Inefficient workplace design is costing $5,000 in unnecessary rework costs.
• Estimated amount of lost profits due to dissatisfied customers who turn to the competition is $80,000.
Based on the above, what is the amount of prevention costs, if any, included here?

Accepted Answer

A) $18,000 
B) $12,000 
C) $15,000 
D) Zero 
A) $18,000 
B) $12,000 
C) $15,000 
D) Zero

Question 17

Nemesis Company manufactures water skis. Nemesis pursues a target pricing strategy. Please review the data below:   Which of the following represents the full-product cost?

Accepted Answer

A) $143 
B) $180 
C) $110 
D) $135 
A) $143 
B) $180 
C) $110 
D) $135

Question 18

Which of the following pertains to a just-in-time production system?

Accepted Answer

A) An individual does fewer tasks than under a traditional system. 
B) Materials and Work in process are combined into a single account. 
C) Units are produced in larger batches than under a traditional system. 
D) Direct labor costs are recorded in their own separate account. 
A) An individual does fewer tasks than under a traditional system. 
B) Materials and Work in process are combined into a single account. 
C) Units are produced in larger batches than under a traditional system. 
D) Direct labor costs are recorded in their own separate account.

Question 19

Archetype Fabrication makes pre-stressed concrete forms for the building industry. They use just-in-time production and accounting methodology. At the beginning of January, selected account balances are shown in the T-accounts below.   During January, the following 5 transactions take place:
  Use the T-accounts shown above to record the transactions, and then answer the following question:
After transaction number 4, what was the balance in the Conversion costs account?

Accepted Answer

A) $28,600 
B) $50,600 
C) $21,400 
D) $3,600 
A) $28,600 
B) $50,600 
C) $21,400 
D) $3,600

Question 20

Quality Stereo Company has provided the following information regarding its activity-based costing system: • Purchasing department costs are allocated based on purchase orders and the cost allocation rate is $75 per purchase order.
• Assembly department costs are allocated based on the number of parts used and the cost allocation rate is $1.00 per part.
• Packaging department costs are allocated based on the number of units produced and the allocation rate is $2.00 per unit produced.
Each stereo produced has 50 parts, and the direct materials cost per unit is $70. There are no direct labor costs. Quality Stereo has an order for 1,000 stereos which will require 50 purchase orders in all. What is the total cost of the 1,000 stereos?

Accepted Answer

A) $125,750 
B) $55,750 
C) $123,750 
D) $122,000 
A) $125,750 
B) $55,750 
C) $123,750 
D) $122,000

Which of the following is NOT a characteristic of just-in-time production?

Johnson Production Company uses just-in-time production and accounting methods. On June 1, Johnson paid direct labor costs of $5,000 in cash. Please provide the journal entry.

Activity-based costing focuses on a single predetermined overhead rate for cost analysis.

Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows: What is the cost of assembling per ceiling fan?

Johnson Production Company uses just-in-time production and accounting methods. On June 1, Johnson purchased $4,000 of raw materials on account. Which of the following journal entries correctly records this transaction?

Which of the following pertains to a just-in-time production system?

An activity-based costing system can be a significant competitive advantage for a business which does bidding for manufacturing work.

Which of the following pertains to a just-in-time production system?

Value engineering requires the collaboration of marketing, engineering and accounting personnel to achieve the optimum results.

Losses caused by downtime in the production process are considered a(n):

Nemesis Company manufactures water skis. Nemesis pursues a target pricing strategy. Please review the data below: Which of the following represents the full-product cost?

Which of the following pertains to a just-in-time production system?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, Bonds Payable, and Classification of Liabilities on the Balance Sheet

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

Filters

Exam 18: Activity-Based Costing and Other Cost Management Tools

Which of the following is NOT a characteristic of just-in-time production?

Johnson Production Company uses just-in-time production and accounting methods. On June 1, Johnson paid direct labor costs of $5,000 in cash. Please provide the journal entry.

Activity-based costing focuses on a single predetermined overhead rate for cost analysis.

Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows: What is the cost of assembling per ceiling fan?

Johnson Production Company uses just-in-time production and accounting methods. On June 1, Johnson purchased $4,000 of raw materials on account. Which of the following journal entries correctly records this transaction?

Which of the following pertains to a just-in-time production system?

An activity-based costing system can be a significant competitive advantage for a business which does bidding for manufacturing work.

Which of the following pertains to a just-in-time production system?

Value engineering requires the collaboration of marketing, engineering and accounting personnel to achieve the optimum results.

Losses caused by downtime in the production process are considered a(n):

Nemesis Company manufactures water skis. Nemesis pursues a target pricing strategy. Please review the data below: Which of the following represents the full-product cost?

Which of the following pertains to a just-in-time production system?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, Bonds Payable, and Classification of Liabilities on the Balance Sheet

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

Filters