Deck 15: Strategic Management Control: a Lean Perspective

Question 1

Under a lean accounting system it is possible to dispense with supplier's invoices.

Answer 1

A

Question 2

The theory of constraints (TOC) involves imposing strict controls and standards on all aspects of the value chain in order to improve efficiency.

Answer 2

B

Question 3

The philosophy of just-in-time processing results in finished goods being completed just in time to be offered for sale.

Answer 3

B

Question 4

Under a lean accounting approach the aim is to remove all non-value added activities.

Question 5

Lean accounting incorporates which of the following?

A) Total quality management
B) The theory of constraints
C) Just-in-time
D) All of the above

Question 6

In throughput costing throughput is the rate at which the system generates cash through sales.

Question 7

Under a traditional accounting system any build-up of inventory will increase profit as it will include deferred fixed overheads.

Question 8

The theory of constraints (TOC) is concerned with constraints on the supply side, not those on the demand side.

Question 9

The originator of the total quality management (TQM) approach was an American, W. Edwards Deming.

Question 10

The just-in-time system is considered a supply-push system.

Question 11

Lean accounting embraces full absorption costing.

Question 12

The 'lean' accounting approach applies to manufacturing entities and is not appropriate for service entities.

Question 13

The philosophy of TQM is to cut costs while increasing quality.

Question 14

An approach to accounting that aims to eliminate all sources of organisational waste from the value chain is known as:

A) strategic management
B) lean accounting
C) just-in-time
D) value chain management

Question 15

The first stage in the lean accounting model is:

A) Identify the relevant value-chain processes and activities
B) Identify and define value in organisational offerings
C) Learning and growth within the organisation to strive for continual perfection
D) Implement a pull system in sync with customer demand

Question 16

In implementing lean accounting concepts the value chain is considered to end when the product or service is sold to the customer.

Question 17

'Value' in lean accounting is defined through the eyes of the customer.

Question 18

Lean accounting refocuses performance measurement systems to emphasise social controls such as training.

Question 19

Physical inspections at every point of the value chain are the key principle underlying TQM.

Question 20

Under a total quality management approach entities that seek only to match the quality of their competitors should reposition themselves as high-quality producers to maximise their profitability.

Question 21

In relation to the drum-buffer-rope concept that is used to maximise flow through an organisational bottleneck, the statement that is correct is:

A) the 'buffer' is the activity of only maintaining a small amount of work in process
B) the 'rope' involves calculating the demand for materials according to specified lead times
C) the 'drum' relates to the activity associated with only inserting materials into the constraint when needed
D) All the statements are correct

Question 22

The just-in-time inventory system is considered a:

A) demand-push system
B) supply-push system
C) supply-pull system
D) demand-pull system

Question 23

The statement concerning the theory of constraints (TOC) that is not true is:

A) It centres on identifying bottlenecks in the organisation
B) Constraints can be on the demand or supply side
C) The theory is only relevant to a small number of businesses
D) None of the statements is untrue, i.e. all are true statements

Question 24

Advantages of just-in time inventory management are all of the following, except:

A) It makes the firm more independent of external suppliers
B) It minimises inventory insurance costs
C) It decreases the space needed for inventory storage
D) It increases manufacturing flexibility

Question 25

Under TOC a constraint that is a demand side rather a supply side constraint is:

A) lack of the necessary knowledge or skills
B) a shortage of raw materials
C) insufficient processing time available
D) none of the above are demand side constraints, all are supply side constraints

Question 26

Which of these is not associated with the lean accounting philosophy?

A) Refocusing the performance measurement system to emphasise social controls such as training
B) Centralising the organisational structure
C) Reducing transaction processing steps
D) All are associated with the lean accounting philosophy

Question 27

Which of these is not a benefit of the just-in-time system?

A) it reduces inventory obsolescence
B) it reduces raw material handling costs
C) it guarantees that inventory will always be available from the supplier
D) none of the above is not a benefit, i.e. all are benefits of the just-in-time system

Question 28

Lean accounting is based on the philosophy:

A) that there should be a complete shareholder-focused approach in the organisation
B) that there should be a complete customer-focused approach in the organisation
C) that there should be a complete employee-focused approach in the organisation
D) that there should be a complete management-focused approach in the organisation

Question 29

The statement concerning lean accounting that is true is:

A) the focus is on achieving economies of scale in production
B) labour is considered to be a period cost and is treated as more fixed than variable
C) a perpetual inventory system needs to be implemented
D) all of the statements are true

Question 30

Which of these is not typically associated with successful implementation of just-in-time (JIT) systems?

A) Locating suppliers with short transit times
B) Using as many suppliers as possible to minimise the risk of non-delivery
C) Finding high quality suppliers
D) Developing management commitment to the JIT process

Question 31

A practice associated with lean accounting is:

A) Vertical reporting
B) Accounting information provided to managers and supervisors only
C) Producing to forecast
D) Producing in teams

Question 32

A just-in-time system reduces costs in all of these ways, except:

A) reducing defect rates
B) reducing the range of products produced
C) maximising the use of space
D) enhancing manufacturing flexibility

Question 33

A limitation of the theory of constraints and throughput costing is that:

A) Labour and overhead costs may be built up to excessive levels
B) Any product mix changes would not generate immediate cash flow effects
C) Management's attention is too focused on long-term results
D) a and b are limitations

Question 34

In throughput costing which of the following is untrue?

A) The throughput of a product is its selling price minus its totally variable costs
B) Investment is also called inventory
C) Profit is defined as throughput less operating expenses
D) Operating expenses are classified and thought of as direct costs

Question 35

Just-in-time manufacturing is dedicated to:

A) having the right amount of materials at the time they are needed
B) having no materials on hand at any time
C) having excessive amounts of materials on hand at all times
D) having to order materials when the factory runs out

Question 36

Lean accounting may involve cutting:

A) the workload
B) paperwork
C) inventory levels
D) all of the above

Question 37

Which of the following terms is typically associated with just-in-time systems?

A) Manufacturing cells
B) Non-value-added activities
C) Demand-push system
D) Linear regression

Question 38

It is correct that under a successful just-in-time production and inventory control system:

A) distance from the supplier is not an issue as long as the supplier is reliable
B) suppliers will normally make frequent deliveries of small lots of materials
C) there must be only one supplier
D) all of the above are correct

Question 39

In throughput costing the throughput of a product refers to its:

A) selling price minus its total fixed costs
B) selling price minus its totally variable costs
C) selling price minus its fixed and variable costs
D) variable costs

Question 40

The major disadvantage of the just-in-time system is:

A) the number of inspections that must occur
B) unforeseen, external events disrupting the delivery schedule
C) the number of small deliveries that must occur
D) all of the above are major disadvantages

Question 41

The total quality management (TQM) approach originated in:

A) Germany
B) USA
C) Japan
D) South Korea

Question 42

The statement concerning total quality management (TQM) that is not true is:

A) it promotes an organisation-wide philosophy
B) the units cost of the product or service generally increase slightly as quality is improved
C) TQM is an important part of lean accounting
D) none of the statements is untrue. i.e. all are true statements

Question 43

Under a value chain approach to quality management, product inspections are an example of which category of quality costs?

A) Internal activities
B) Prevention activities
C) Appraisal activities
D) External activities

Question 44

MNL's accounting information system reported warranty repair and product replacement costs totalling $120,000 in a recent accounting period. These costs are an example of which type of quality costs?

A) External activity costs
B) Appraisal activity costs
C) Internal activity costs
D) Prevention activity costs

Question 45

Activities performed under a value chain approach to quality management, to insure defect-free production, such as routine equipment maintenance or quality training, represent which category of quality costs?

A) Internal activities
B) Prevention activities
C) External activities
D) Appraisal activities

Question 46

The statement that is incorrect concerning total quality management is:

A) there is an emphasis on process management
B) there is extensive employee participation and training
C) there is a strong customer focus
D) none of the statements is incorrect, i.e. all are correct statements