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

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Question 41

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A nonfinancial measure is operating information that has not been translated into dollars.

A) True
B) False

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Question 42

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Lead time is the process time between start and completion.

A) True
B) False

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Question 43

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From the foregoing information, determine the manufacturing cost per unit.

Which of the following is characteristic of the traditional cost system?

In a lean system, the work in process and raw materials inventory accounts are combined.

Identity the following by their type of quality cost. -Preventive machine maintenance

manufacturing philosophy emphasizes quality and zero defects.

It is easier to quantify costs of controlling quality than the costs of failing to control quality.

The lean philosophy views inventory as a necessary buffer to protect against process problems.

Which of the following results in fewer transactions in lean accounting?

Identity the following by their type of quality cost. -Testing

In a lean system, there are fewer transactions to record than there are in a traditional system.

Make-to-order companies produce mainly to stock inventory.

Large batch sizes increase lead time.

Identity the following by their type of quality cost. -Returned merchandise

A college would like to increase enrollment by streamlining the enrollment process. Which of the following would not fall in line with the college goal?

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

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 a) prevention and b) appraisal costs.

In a lean system, direct labor is included in conversion costs.

Within-batch wait time increases total lead time.