Exam 19: Value-Based Systems- Abm and Lean

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

Nonvalue-adding activities

In moving toward the just-in-time continuous work flow concept,a key objective is the elimination of waste.

The JIT operating philosophy must be adopted by everyone in a company before its total benefits can be realized.

In a just-in-time environment,a manager is interested in trends in inventory turnover.

For work done during August,Printing Press Company incurred direct materials costs of $139,000 and conversion costs of $260,000.The company employs a just-in-time operating philosophy and backflush costing.At the end of August,it was determined that the Work in Process Inventory account had been assigned $1,080 of costs,and the ending balance of the Finished Goods Inventory account was $1,220.There were no beginning inventory balances.What was the ending balance of the Cost of Goods Sold account for August?

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

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?

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

For a bank,a credit check of a loan applicant is an example of a batch-level activity.

In activity-based costing,the first step in assigning costs is to

M.E.Taylor Enterprises had the following transactions during October.There were no beginning inventory balances. a. Purchased $37,300 of direct materials, on account. b. Incurred direct labor costs, $29,250. c. Applied $37,500 of overhead to production. d. Completed units costing $88,450. e. Sold units costing $76,130. Using backflush costing, show the flow of costs using the T accounts below. Label each entry with the appropriate letter.

For service organizations,customer relations are part of the supply chain and customers are part of the value chain.

The time a product spends waiting to be worked on is called storage time.

Many of the reports and analyses prepared in traditional management settings need to be changed to satisfy managers' needs in the new manufacturing environment.

President/CEO to her Controller: "On the golf course yesterday I overheard John Jeffers,the CEO for Octal,say that the problem with many manufacturing companies today is their antiquated manufacturing cost accounting systems.It appears to me that our cost accounting system has served us well as our company has grown and should continue to serve us well as we move into JIT production with our new flexible manufacturing system." As the Controller,respond to the President/CEO.

The use of computer monitoring allows product costs to be traced directly to work cells.

Which of the following is not a concern when managing inventory in a just-in-time environment?

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?

Backflush costing aims at decreasing waste in the production process.