Exam 4: Value-Based Systems- Abm and Lean

Last year, Amanda Jones opened a candy store in a busy shopping center. She spent a lot on advertising and attracted many customers into the store, but very few customers made purchases and sales were declining. Amanda paid attention to questions and requests made by customers and determined that they often requested items that were within the scope of her business but that she did not carry. When she offered to order items for her customers, delivery was usually too late and, again, sales were lost. What measures should Amanda take to improve her business?

Managers eliminate non-value-adding activities that are not essential to an organization.

Which of the following activities would be part of the value chain of a manufacturer?

In a just-in-time manufacturing environment, both push-through and pull-through methods trigger scheduling of production.

Just-in-time operations attempt to significantly reduce

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?

Which of the following statements contradicts the philosophy underlying the just-in-time operating environment?

A bill of activities is useful for estimating a company's profits.

Activity-based management focuses on identifying product costs as either value-adding or nonvalue-adding activities.

A nonvalue-adding activity is one that increases the cost of a product but does not add to the product's market value.

One element of a just-in-time operating environment is pull-through production, which means that a firm starts production of a product only after an order is received.

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

A goal of process value analysis (PVA) is to reduce nonvalue-adding activities. Outline a procedure a company could use to accomplish this goal.

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

For work done during August, Printing Press Company incurred direct materials costs of $130,000 and conversion costs of $226,000. 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 $1,000 of costs, and the ending balance of the Finished Goods Inventory account was $3,000. There were no beginning inventory balances. How much was cost of goods manufactured during August?

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

In a traditional environment, costs are tracked through the various production departments as products or services move through the production process.

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

Activity-based management is an extension of activity-based costing.

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