Exam 22: Activity-Based Systems-Abm and Lean

According to the just-in-time philosophy,

When managing inventory in a just-in-time environment, there is less need to control personnel.

In a just-in-time environment,

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

Traditional environments emphasize functional departments that tend to group similar activities together.

Backflush costing aims at decreasing waste in the production process.

Ressano Manufacturing had the following transactions during March. There were no beginning inventory balances. a. Purchased $96,000 of direct materials, on account. b. Incurred direct labor costs, $83,000. c. Applied $88,000 of overhead to production. d. Completed units costing $252,000. e. Sold units costing $250,000. Using backflush costing, show the flow of costs using the T accounts below. Label each entry with the appropriate letter.

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

Backflush costing eliminates the need for a Cost of Goods Sold account.

Define activity-based costing. Explain why this approach to cost assignments is superior to the traditional method of using a plantwide overhead cost rate. Will activity-based costing always result in lower product costs? Defend your answer.

Departments 4. Value-adding activities

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

The Cost of Goods Sold account will have the same ending balance whether using traditional or backflush costing.

For work done during August, Printing Press Company incurred direct materials costs of $104,000 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?

Listed below are a number of common manufacturing costs. For each cost, state whether the cost would be considered a direct (D) or indirect (I) cost in a traditional manufacturing environment and in a JIT manufacturing environment.

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.

Which of the following statements is true?

In a just-in-time environment using backflush costing, the entry to record the use of materials for the month's production is debit __________ and credit __________.

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

Which one of the four levels of the cost hierarchy would be used by a dress manufacturer that uses activity-based management for a production run of a certain style of dress in blue?