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Exam 27: Lean Principles, Lean Accounting, and Activity Analysis

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Question 31

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Which of the following is an example of a nonfinancial measure?

A) lead time
B) setup time
C) units scrapped
D) all of the above

E) None of the above
F) B) and C)

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Question 32

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

A) True
B) False

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Question 33

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Employee involvement does not include performing any indirect manufacturing functions.

Schedule of Activity Costs $\begin{array}{|l|l|}\hline \text { Quality Control Activities } & \text { Activity Cost } \\\hline \text { Frocess audits } & \$ 50,000 \\\hline \text { Training of machine operators } & 28,000 \\\hline \text { Frocessing returned products } & 19,000 \\\hline \text { Scrap processing disposal) } & 25,000 \\\hline \text { Rework } & 8,000 \\\hline \text { Freventative maintenance } & 30,000 \\\hline \text { Froduct design } & 46,000 \\\hline \text { Warranty work } & 12,000 \\\hline \text { Finished goods inspection } & 23,000 \\\hline\end{array}$ -From the above schedule of activity costs, determine the value-added costs.

The lean philosophy attempts to reduce setup times, which will:

A process-oriented layout segments production facilities into functional departments.

Lean manufacturing focuses on reducing time, cost, and poor quality in processes.

Which of the following is best suited to providing timely and focused performance information?

Which of the following is not an external failure cost?

Identify the following quality control activities as either value-added or non-value-added. -Customer service calls

Which of the following is are) objectives) of lean manufacturing?

Schedule of Activity Costs $\begin{array}{|l|l|}\hline \text { Quality Control Activities } & \text { Activity Cost } \\\hline \text { Product testing } & \$ 55,000 \\\hline \text { Assessing vendor quality } & 26,000 \\\hline \text { Recalls } & 18,000 \\\hline \text { Rework } & 29,000 \\\hline \text { Scrap disposal } & 8,000 \\\hline \text { Product design } & 30,000 \\\hline \text { Training machine operators } & 46,000 \\\hline \text { Warranty work } & 12,000 \\\hline \text { Process audits } & 22,000 \\\hline\end{array}$ -From the above schedule, calculate the internal failure costs.

The Kwanika Co. operates in a lean manufacturing environment. During its first year of operations, Kwanika budgeted for 40,000 hours in the production of 100,000 units in its cell X-22. Material costs were $7 per unit. Cell X-22 conversion costs were budgeted for the year as follows: $\begin{array}{ll}\text { Direct and indirect labor } & \$ 900,000 \\\text { Machine depreciation } & 125,000 \\\text { Maintenance and supplies } & 375,000 \\\text { Utilities } & 225,000\\\text { Total }&\$1,625,000\end{array}$ During January, material for 8,400 units was purchased on account. There were 8,200 units manufactured and 8,000 were sold shipped to customers for $35 each. Journalize: a) the material purchases; b) the application of conversion costs; c) the transfer from work in process to finished goods; and d) the sales were made on account) and associated cost of goods sold for the month of January.

In a lean environment, raw materials are delivered more frequently than in a traditional environment.

In a lean environment, process problems are less visible than they are in a traditional environment.

Schedule of Activity Costs $\begin{array}{|l|l|}\hline \text { Quality Control Activities } & \text { Activity Cost } \\\hline \text { Product testing } & \$ 55,000 \\\hline \text { Assessing vendor quality } & 26,000 \\\hline \text { Recalls } & 18,000 \\\hline \text { Rework } & 29,000 \\\hline \text { Scrap disposal } & 8,000 \\\hline \text { Product design } & 30,000 \\\hline \text { Training machine operators } & 46,000 \\\hline \text { Warranty work } & 12,000 \\\hline \text { Process audits } & 22,000 \\\hline\end{array}$ -From the above schedule, compute the percentage of non-value-added activities.

Push manufacturing made-to-stock) is a traditional approach to manufacturing.

Examples of transforming a traditional manufacturing environment to a lean environment is to do all of the following except

Which of the following results in long lead time?

The budgeted cell conversion cost rate is very similar to the predetermined factory rate because both include only factory overhead costs.