Question 1

Non-financial accounting information is used more often for long-term operating decisions than is financial information.

Accepted Answer

A) True 
 B)False

Question 2

Lead time includes both value-added time and non-value-added time.

Accepted Answer

A) True 
 B)False

Question 3

By spending more in costs of controlling quality, the costs of failing to control quality will decrease.

Accepted Answer

A) True 
 B)False

Question 4

Lead time reduction can be a cost-saving goal for any processed item.

Accepted Answer

A) True 
 B)False

Question 5

In a just-in-time (JIT) system, direct labor is included in conversion costs.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is characteristic of a just-in-time (JIT) production layout?

Accepted Answer

A)  Decentralized maintenance 
B)  Small production batches 
C)  Organization around processes 
D)  Both A and B 
A)  Decentralized maintenance 
B)  Small production batches 
C)  Organization around processes 
D)  Both A and B

Question 7

In a just-in-time (JIT) environment, process problems are more visible than they are in a traditional environment because:

Accepted Answer

A)  inventories are maintained at higher levels. 
B)  process problems cause production to shut down immediately. 
C)  the push manufacturing system leads to increased inventory level. 
D)  the lack of work in process inventory creates problems. 
A)  inventories are maintained at higher levels. 
B)  process problems cause production to shut down immediately. 
C)  the push manufacturing system leads to increased inventory level. 
D)  the lack of work in process inventory creates problems.

Question 8

Schedule of Activity Costs  From the above schedule of activity costs, determine the value-added costs.

Accepted Answer

A)  $177,000 
B)  $191,000 
C)  $156,000 
D)  $104,000 
A)  $177,000 
B)  $191,000 
C)  $156,000 
D)  $104,000

Question 9

____ manufacturing deals with several suppliers in hopes of finding the best price.

Accepted Answer

A)  Traditional 
B)  Just-In-Time 
C)  Economic 
D)  Productivity improvement 
A)  Traditional 
B)  Just-In-Time 
C)  Economic 
D)  Productivity improvement

Question 10

Extreme Wreaths, Inc. makes wreaths in batch sizes of 15 at a time. The cutting & assembly process takes 10 minutes per wreath, and the decorating process time is 7 minutes per wreath. It takes 5 minutes to move the wreaths from the cutting & assembly process to the decorating process.
In a effort to improve the lead time, the company has tried reducing the batch size to 10 units. The new process is as follows: cutting & assembly process - 8 minutes. The decorating process is still 7 minutes per wreath. It takes 5 minutes to move the wreaths from the cutting & assembly process to the decorating process.
(a) Compute the value-added, non-value-added, and the total lead time of the wreath process for both the old and the new manufacturing process.
(b) Compute the value-added ratio for both the old and new process. Round to the nearest decimal.

Accepted Answer

The answer of Extreme Wreaths, Inc. makes wreaths in batch...

Question 11

One inherent risk to using just-in-time philosophy is that companies are at higher risk of inventory shortage during volatile times such as strikes, weather, etc. than the traditional philosophy.

Accepted Answer

A) True 
 B)False

Question 12

In a just-in-time (JIT) environment, process problems are less visible than they are in a traditional environment.

Accepted Answer

A) True 
 B)False

Question 13

Tucha Manufacturing Co. operates in a just-in-time (JIT) manufacturing environment. The company had scheduled production of 95,000 units during February in its Y12 cell. Actual February production totaled 88,200 units. Tucha had budgeted conversion costs for February totaling $800,000 and budgeted production hours totaling 2,000.
Compute Tucha's budgeted cell conversion cost per unit for Cell Y12.

Accepted Answer

Budgeted cell conversion cost

Question 14

In a push manufacturing system, raw materials are released to production based on forecasted demand.

Accepted Answer

A) True 
 B)False

Question 15

Just-in-Time (JIT) manufacturing is also called make-to-stock manufacturing.

Accepted Answer

A) True 
 B)False

Question 16

Just-in-Time (JIT) manufacturing favors organizing work around products rather than around processes.

Accepted Answer

A) True 
 B)False

Question 17

In a just-in-time (JIT) environment, the journal entry to record conversion costs would include a debit to the manufacturing overhead control account.

Accepted Answer

A) True 
 B)False

Question 18

Under a JIT environment, employees have the responsibility and authority to

Accepted Answer

A)  purchase inventory. 
B)  determine output amounts. 
C)  make decisions about operations, rather than waiting for management. 
D)  make engineering changes. 
A)  purchase inventory. 
B)  determine output amounts. 
C)  make decisions about operations, rather than waiting for management. 
D)  make engineering changes.

Question 19

Schedule of Activity Costs   From the above schedule of activity costs, determine the external failure costs.

Accepted Answer

A)  $39,000 
B)  $19,000 
C)  $12,000 
D)  $31,000 
A)  $39,000 
B)  $19,000 
C)  $12,000 
D)  $31,000

Question 20

The local college is aggressively working in reducing the time that a student needs to enroll for each semester. Which of the following changes would not help achieve this goal?

Accepted Answer

A)  Counselors are specializing in common degree plans 
B)  One application is good at the community college and at the transferring university 
C)  A one stop area includes admissions, advising, registration and student ID's 
D)  Having more number of counters to facilitate admission process 
A)  Counselors are specializing in common degree plans 
B)  One application is good at the community college and at the transferring university 
C)  A one stop area includes admissions, advising, registration and student ID's 
D)  Having more number of counters to facilitate admission process

Exam 27: Cost Management for Just-In-Time Environments

Non-financial accounting information is used more often for long-term operating decisions than is financial information.

Lead time includes both value-added time and non-value-added time.

By spending more in costs of controlling quality, the costs of failing to control quality will decrease.

Lead time reduction can be a cost-saving goal for any processed item.

In a just-in-time (JIT) system, direct labor is included in conversion costs.

Which of the following is characteristic of a just-in-time (JIT) production layout?

In a just-in-time (JIT) environment, process problems are more visible than they are in a traditional environment because:

Schedule of Activity Costs From the above schedule of activity costs, determine the value-added costs.

____ manufacturing deals with several suppliers in hopes of finding the best price.

One inherent risk to using just-in-time philosophy is that companies are at higher risk of inventory shortage during volatile times such as strikes, weather, etc. than the traditional philosophy.

In a just-in-time (JIT) environment, process problems are less visible than they are in a traditional environment.

In a push manufacturing system, raw materials are released to production based on forecasted demand.

Just-in-Time (JIT) manufacturing is also called make-to-stock manufacturing.

Just-in-Time (JIT) manufacturing favors organizing work around products rather than around processes.

In a just-in-time (JIT) environment, the journal entry to record conversion costs would include a debit to the manufacturing overhead control account.

Under a JIT environment, employees have the responsibility and authority to

Schedule of Activity Costs From the above schedule of activity costs, determine the external failure costs.

The local college is aggressively working in reducing the time that a student needs to enroll for each semester. Which of the following changes would not help achieve this goal?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

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