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

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

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

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

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

.Johnson Products Company is in the process of adopting the just-in-time operating philosophy for its idol-making operations.Indicate which of the following overhead costs is a nonvalue-adding cost (NVA).

Both traditional and backflush costing have an account for __________ Inventory.

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 charged to the Cost of Goods Sold account during June?

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

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

In a just-in-time environment,

Lean's primary goal is to eliminate waste in business processes.

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

The just-in-time operating environment typically is characterized by a large number of non-value-adding activities.

Distinguish between push-through and pull-through production methods.How does pull-through production meet the requirements of a just-in-time operating environment?

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

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.

Activity-based costing is the tool used in an ABM environment to assign activity costs to cost objects.

Typically,there are four levels in the cost hierarchy.

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. 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.

A just-in-time operating environment requires maintenance of large material and finished goods inventories in order to meet customer demand for products.