Exam 19: Value-Based Systems- Abm and Lean

For a company offering services,which of the following is a value-adding activity?

Nonvalue-adding activity costs do not increase a product's cost because they do not add value to the product.

Why is process value analysis not part of the general ledger accounting system?

Resser Corporation manufactures serving trays and utensils for use by airlines for meal service.Several airlines order these products in large quantities.Resser had adopted an activity-based management philosophy.Listed below are the principal activities of the company. Product inspection Product marketing Product packaging Accounting Materials storage Moving work in process Product engineering Inventory control Product scheduling Production - assembly Materials purchasing Production area clean up Production -machine setup Human resources services Building maintenance Product rework New product design Depreciation of building a. Identify activities that are nonvalue-adding. b. Analyze each of the nonvalue-adding activities and determine which are necessary. Suggest how each of the activities that you classified as unnecessary could be reduced or eliminated.

Last year,Amanda Jones opened a candy store in a busy shopping center.She spent a lot on advertising and attracted many customers into the store,but very few customers made purchases and sales were declining.Amanda paid attention to questions and requests made by customers and determined that they often requested items that were within the scope of her business but that she did not carry.When she offered to order items for her customers,delivery was usually too late and,again,sales were lost.What measures should Amanda take to improve her business?

In a traditional operating environment,a company usually

Both activity-based management (ABM)and just-in-time (JIT)seek to eliminate or reduce nonvalue-adding activities and to improve the allocation of resources.

A goal of process value analysis (PVA)is to reduce nonvalue-adding activities.Outline a procedure a company could use to accomplish this goal.

A just-in-time philosophy seeks to minimize inventories.

Which one of the four levels of the cost hierarchy would be used by a dress manufacturer that uses activity-based management to design a pattern for a new dress style?

The actual amount of time that a product is being worked on is known as the

Traditional costing and backflush costing provide the same ending balances only when there is little or no ending inventory.

For a small coffee cafe,which of the following is a nonvalue-adding activity?

Comparing activity-based management (ABM)and lean operations,all of the following are correct except

In a just-in-time setting,the time spent reworking defective units is called __________ time.

The major objective of the just-in-time operating environment is to

Identify the following activities,for an automobile manufacturer,as either value-adding (V)or nonvalue-adding (NV). _____ a. _____Moving products b. _____Storing parts c. _____Research and development d. _____Inventory control e. _____Production _____ f. Customer service _____ g. Cost accounting _____ h. Engineering

For work done during August,Printing Press Company incurred direct materials costs of $130,000 and conversion costs of $226,000.The company employs a traditional operating philosophy.At the end of August,it was determined that the Work in Process Inventory account had been assigned $1,000 of costs,and the ending balance of the Finished Goods Inventory account was $3,000.There were no beginning inventory balances.How much was cost of goods manufactured during August?

Storage time is the time a product spends waiting to be worked on once it arrives at the next operation.

Activity-based management is useful for both strategic planning and operational decision making.