Deck 19: Value-Based Systems- Abm and Lean

Question 1

A supply chain is a related sequence of value-creating activities within an organization.

Answer 1

False

Question 2

Value-based systems are information systems that provide only customer-related information but not activity-based information.

Answer 2

False

Question 3

For a manufacturer,the final customer is part of the supply chain and customer service is part of the value chain.

Answer 3

True

Question 4

A non-value-adding activity is one that adds cost to a product or service and also increases its market value.

Question 5

Nonvalue-adding activity costs do not increase a product's cost because they do not add value to the product.

Question 6

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

Question 7

Activity-based management is useful for both strategic planning and operational decision making.

Question 8

For a manufacturer,materials storage is a value-adding activity.

Question 9

The value chain is the sequence of business activities in which usefulness is added to the products or the services within an organization.

Question 10

A company's value chain includes the value chains of its suppliers but not its customers.

Question 11

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

Question 12

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

Question 13

The repair of machines is an example of a nonvalue-adding activity.

Question 14

A value chain involves a sequence of value-creating activities within an organization.

Question 15

The customer's perspective governs whether an activity adds value to a product or service.

Question 16

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

Question 17

Full product cost is relevant for companies providing services as well as those providing products.

Question 18

Nonproduction costs are not included in full product cost.

Question 19

The value chain is also called the supply network.

Question 20

For service organizations,customer relations are part of the supply chain and customers are part of the value chain.

Question 21

Only value-adding activities are included in the cost hierarchy.

Question 22

In moving toward the just-in-time continuous work flow concept,a key objective is the elimination of waste.

Question 23

In a just-in-time environment,more quality control inspectors are needed because of the high speed of production.

Question 24

Activity costs per unit equal total activity costs divided by total volume.

Question 25

A cost hierarchy and a bill of activities are tools for the implementation of activity-based costing.

Question 26

When managing inventory in a just-in-time environment,there is less need to control personnel.

Question 27

A bill of activities may be used to calculate the product unit costs only for manufacturing concerns but not for service units.

Question 28

Typically,there are seven levels in the cost hierarchy.

Question 29

A just-in-time philosophy seeks to minimize inventories.

Question 30

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

Question 31

A bill of activities is used to compute both the costs assigned to activities and the product unit cost.

Question 32

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

Question 33

In a just-in-time environment,a manager is interested in trends in inventory turnover.

Question 34

Many of the reports and analyses prepared in traditional management settings need to be changed to satisfy managers' needs in the new manufacturing environment.

Question 35

Unit level,batch level,and service level are examples of cost drivers.

Question 36

Traditional environments emphasize functional departments that tend to group similar activities together.

Question 37

Activity-based costing is useful for profit planning.

Question 38

Just-in-time operating environments encourage continuous improvement of the work environment.

Question 39

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.

Question 40

For a bank,a credit check of a loan applicant is an example of a batch-level activity.

Question 41

Storage time is the time a product spends waiting to be worked on once it arrives at the next operation.

Question 42

The time a product spends waiting to be worked on is called storage time.

Question 43

A just-in-time operation would attempt to eliminate inspection time.

Question 44

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

Question 45

Shifting to a just-in-time approach in a manufacturing environment usually requires a new approach in evaluating costs.

Question 46

The use of computer monitoring allows product costs to be traced directly to work cells.

Question 47

In just-in-time manufacturing,the basic cost classifications used in product costing are materials and conversion costs.

Question 48

In the JIT environment,direct materials and conversion costs should be nearly uniform for each product in a work cell.

Question 49

When managing the production process in a just-in-time environment,the manager's focus is on throughput time.

Question 50

The JIT operating philosophy must be adopted by everyone in a company before its total benefits can be realized.

Question 51

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

Question 52

A just-in-time operation seeks to eliminate all product support functions.

Question 53

In order for a manager to reduce throughput time,it is necessary for the accounting system to focus on calculating units produced per direct labor hour.

Question 54

In a just-in-time environment,costs associated with product movement and storage typically decrease,whereas costs of inspection and queue time typically increase.

Question 55

A work cell is an autonomous production line that can perform only one required operation efficiently at a time.

Question 56

The just-in-time operating environment typically is characterized by the positioning of all similar machines together on the factory floor.

Question 57

Cost traceability is decreased in a just-in-time operating environment.

Question 58

Product throughput time refers to the amount of time that a product spends in a production cell.

Question 59

Push-through method is used in traditional manufacturing operations.

Question 60

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

Question 61

Process value analysis (PVA)identifies all activities of a production and/or assembly operation for the purpose of

A) preparing budgets based on activity centers.
B) determining the value of the process.
C) replacing cost drivers used in cost assignment analyses with activities.
D) relating cost assignment to the activities that caused the cost to be incurred.

Question 62

Traditional costing and backflush costing provide the same ending balances only when there is little or no ending inventory.

Question 63

Lean's primary goal is to eliminate waste in business processes.

Question 64

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

Question 65

Full product cost includes

A) all direct labor and direct material costs and all production and nonproduction costs.
B) only nonproduction costs.
C) only the costs of direct material.
D) only the costs of direct labor.

Question 66

Nonvalue-adding activities

A) are unnecessary activities.
B) are included in the value chain of activities.
C) are all wasteful and targeted for elimination.
D) add cost to a product or service but does not increase its market value

Question 67

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

A) Inventory control
B) Product engineering
C) Cost accounting
D) Materials storage

Question 68

Lean uses JIT and reorganizes many activities so that they are performed within the work cells.

Question 69

Activity-based costing applies only to production-related activities.

Question 70

The three inventory accounts used in traditional costing are replaced by two inventory accounts in backflush costing.

Question 71

Which of the following is an example of a nonvalue-adding activity?

A) Product distribution activity
B) Customer service activity
C) Data processing activity
D) Product design activity

Question 72

Customer relations are usually part of

A) the supply chain.
B) the value chain.
C) both the value chain and the supply chain.
D) neither the value chain nor the supply chain.

Question 73

Both the number of entries and the number of ledger accounts decrease when you change to a backflush costing system.

Question 74

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

Question 75

Both activity-based management (ABM)and just-in-time (JIT)seek to eliminate or reduce nonvalue-adding activities and to improve the allocation of resources.

Question 76

Which of the following statements is true?

A) A company's value chain is not part of its supply chain.
B) A manufacturer's supply chain typically includes research and development and customer service.
C) A company's supply chain includes the value chains of its suppliers.
D) Your supplier's suppliers are part of your value chain.

Question 77

Activity-based management includes all of the following except identifying

A) customer satisfaction with a product or service.
B) the resources that are consumed by each activity.
C) activities as value-adding.
D) how resources are consumed by each activity.

Question 78

Backflush costing eliminates the need to make journal entries during the period to track cost flows through the production process as the product is made.

Question 79

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

A) Shipping
B) Customer service
C) Parts manufacturing
D) Research and development

Question 80

Backflush costing aims at decreasing waste in the production process.