Exam 22: Activity-Based Systems-Abm and Lean

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

A supply chain is a related sequence of value-creating activities within an organization.

Activity costs per unit equal total activity costs divided by total volume.

Identify the following activities, performed on a manufactured product, as value-adding (V) or nonvalue-adding (NV). _____ a. Receiving _____ b. Storing raw materials _____ c. Moving materials _____ d. Working on product _____ e. Painting product _____ _____ f. Packing and shipping _____ g. Engineering design of product _____ h. Storing finished goods

What would a company using an activity-based management approach attempt to do in regard to activities that add value to the product and those that do not?

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

Product unit costs computed using activity-based costing compared to product unit costs computed using a traditional costing approach will

A bill of activities is used to compute both the costs assigned to activities and the product unit cost.

Engineering design is an activity vital to the success of any motor vehicle manufacturer. Identify the level at which engineering design would be classified in the cost hierarchy used with ABC for a maker of built-to-order city and county emergency vehicles (orders are usually placed for 10 to 12 identical vehicles).

A bill of activities is useful for estimating a company's profits.

For a manufacturer, the final customer is part of the supply chain and customer service is part of the value chain.

Product throughput time refers to the amount of time that a product spends in a production cell.

Which one of the four levels of the cost hierarchy would be used by a dress manufacturer that uses activity-based management for the routine maintenance of sewing machines?

When using backflush costing, product costs are first accumulated in the __________ account.

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 cleanup 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.

How do managers measure an activity's performance?

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

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

In a traditional operating environment, a company usually

To minimize costs, managers continuously seek to improve processes and activities.