Exam 20: Value-Based Systems: Activity-Based Costing and Lean Accounting

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

Why is process value analysis not part of the general ledger accounting system?

Which of the four levels of the cost hierarchy would be used by a dress manufacturer using an activity-based management to design a pattern for a new dress style?

The value chain analysis allows a company to focus on its core competencies.

Insuring a factory is classified as a(n)__________-level activity in an activity-based costing system.

Cost hierarchy includes only value-adding activities.

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.

Which of the following is a product-level activity cost?

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

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

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?

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.

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

Which of the four levels of the cost hierarchy would be used by a ice cream producer using an activity-based management for a production run of a certain quantity of ice cream of vanilla flavor?

For a manufacturer,materials storage is a value-adding activity.

For work done during August,Footprints 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. -Using the information provided for Footprints Company,what was the ending balance of the Cost of Goods Sold account for August?

A work cell is an autonomous production line that can perform only one required operation efficiently at a time.

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

For work done during August,Footprints 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. -Using the information provided for Footprints Company,what is the cost of completed units for August?

Activity-based costing applies only to production-related activities.