Exam 18: Value-Based Systems: Activity-Based Costing and Lean Accounting

Which of the following statements is true of a traditional operating environment?

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

Explain how a just-in-time operating philosophy reduces the time it takes to complete the production of a product.Include in your answer the classifications of time that are affected.How does such a change help to reduce product costs?

The initial step in achieving the efficiency of a just-in-time system is to

Which of the following is a batch-level activity?

Reports and analyses prepared in traditional management settings will match the requirement of the new manufacturing environment.

Cost hierarchy includes only value-adding activities.

Process value analysis (PVA)identifies all activities of a production and/or assembly operation for the purpose of

Backflush costing eliminates the need to make journal entries during the period to track cost flows through the production process as the product is made.

A just-in-time operation seeks to eliminate all product support functions.

Activity-based management focuses on identifying product costs as either variable or fixed.

A change to just-in-time manufacturing expands mainly the role of the

Which of the following statements is true of the just-in-time operating environment?

Many indirect costs in a traditional system become direct costs in a JIT system.

Maintaining consistent high product quality

Distinguish between a supply chain and a value chain.How do they relate to each other?

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 a line of automobiles sold throughout the world.

When managing the production process in a just-in-time environment,the manager's focus is on the quantity of raw material used to produce a product.

For work done during June,Prints Company incurred direct materials costs of $150,000 and conversion costs of $225,000.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 $2,000 of costs,and the ending balance of the Finished Goods Inventory account was $5,000.There were no beginning inventory balances. Using the information provided for Prints Company. -How much was cost of goods manufactured during June?

You have been invited to address the Students In Free Enterprise (SIFE)team of your alma mater.The topic the team has chosen is the just-in-time philosophy in terms that beginning business students can readily comprehend.The meeting is taking place in the college cafeteria.Reservations and menu choices have been made in advance.It has been suggested that you use that setting as an example of the implementation of a JIT operating system.It will also be beneficial if you indicate in your talk some instances where JIT would be less suitable in the college food services situation.What will you say?