Question 1

What is characteristic of the emphasis on departmental efficiency?
A)It causes bottleneck departments to overproduce and build work-in-process inventories.
B)It causes stock outs related to demand-pull systems.
C)It causes a critical component of a lean accounting system to be minimized.
D)It causes a decrease in overall production.

Accepted Answer

When departments are solely focused on their own efficiency, they may overproduce in order to meet their own targets, which can lead to an accumulation of work-in-process inventories and possible bottlenecks in the production process.

Question 2

What are many overhead costs assigned to in a lean environment?
A)products using driver tracing
B)products as directly traceable costs
C)products using allocation methods
D)costs using plantwide overhead rates

Accepted Answer

In a lean environment, overhead costs should be minimized and allocated directly to products as traceable costs. This helps to accurately identify the true costs of each product and support lean manufacturing principles such as continuous improvement and waste reduction. Driver tracing and allocation methods can introduce unnecessary complexity and inaccuracies, while plantwide overhead rates may not reflect the true costs of individual products.

Question 3

What is the purpose of the production rate?
A)to tell how many units of a product can be produced by the manufacturing cell
B)to calculate how many minutes it takes an operation to process one unit of product
C)to calculate the processing time of the slowest department
D)to calculate the wait and move time of a production

Accepted Answer

The purpose of the production rate is to tell how many units of a product can be produced by the manufacturing cell. This is important for planning and determining the capacity of the production line.

Question 4

What is the only allocation used regularly in a value stream cost assignment?
A)facilities
B)depreciation
C)maintenance
D)setup costs

Accepted Answer

Facilities costs are regularly allocated in a value stream cost assignment because they are typically shared across multiple value streams and need to be distributed accordingly.

Question 5

The following information relates to Markely Manufacturing:
$$\begin{array} { l l } 
\text { Mixing Department } & 2 \text { minutes per unit } \
\text { Moulding Department } & 4 \text { minutes per unit } \
\text { Casting Department } & 6 \text { minutes per unit } \
\text { Finishing Department } & 3 \text { minutes per unit }
\end{array}$$
There is a wait time of 8 minutes before the Mixing Department begins a batch, 5 minutes between the Mixing and Moulding departments, a move and pre-wait between Moulding and Casting of 10 minutes, and a move and pre-wait between the Casting and Finishing departments of 12 minutes.
-Refer to the figure.How long would it take to process the first unit of a 20-unit batch under a cellular manufacturing setup?
A)15 minutes
B)17 minutes
C)23 minutes
D)50 minutes

Accepted Answer

The first unit of a 20-unit batch would take 15 minutes to process under a cellular manufacturing setup. This is because the first unit would not have to wait for any other units to be processed before it could move to the next department.

Question 6

Why does lean accounting work in a lean manufacturing environment?
A)Standard costing variances encourage overproduction.
B)Distorted product costs may conceal the outcome of success of a lean system.
C)Traditional operational controls work against demand-pull systems.
D)Single-value stream allows for direct tracing of costs to product

Accepted Answer

In lean manufacturing, the focus is on creating value for the customer while minimizing waste. Lean accounting supports this by providing a more accurate and transparent view of costs, which allows for better decision-making. By having a single-value stream, it becomes easier to trace costs directly to products or activities, which can help identify areas for improvement and eliminate waste. Traditional costing methods, such as standard costing, may encourage overproduction and hide inefficiencies in the system. Therefore, lean accounting with its focus on direct-tracing of costs is the best choice in a lean manufacturing environment.

Question 7

If a facility has costs of $100,000 per year and 20,000 square metres,and if 19,000 square metres are absorbed by the value streams,what happens to the unabsorbed cost of the remaining 1,000 metres?
A)The cost is allocated to all the value streams based on proportionate square foot usage.
B)The cost is assigned to all value streams equally.
C)The cost is absorbed by the largest value stream.
D)The cost is deducted from revenue as a separate item.

Accepted Answer

The answer of If a facility has costs of $100,000...

Question 8

What is the JIT solution?
A)It requires carrying materials inventory to lower the cost of inventory without production delays.
B)It requires selection of vendors based on lowest cost alone.
C)It negotiates long-term contracts with involved suppliers located closest to the production facility
D)It requires a solid forecast to push production.

Accepted Answer

JIT (Just-In-Time) solution emphasizes minimizing inventory levels and reducing waste by receiving goods only as they are needed in the production process. This approach often involves negotiating long-term contracts with suppliers, preferably those located close to the production facility, to ensure timely delivery of materials, thus supporting the JIT objective of reducing inventory costs and enhancing efficiency.

Question 9

The following information relates to Ramesy Manufacturing:
To produce a unit of product
$$\begin{array} { l l } 
\text { Cutting Deparment } & 5 \text { mintes per unit } \
\text { Welding Department } & 8 \text { minutes per unit } \
\text { Polishing Department } & 3 \text { minutes per unit } \
\text { Finishing Department } & 4 \text { minutes per unit }
\end{array}$$
There is a wait time of 5 minutes before the Cutting Department begins a batch, 15 minutes between the Cutting and Welding departments, a move and pre-wait between Welding and Polishing of 12 minutes, and a move and pre-wait between the Polishing and Finishing departments of 8 minutes.
-Refer to the figure.What is the production rate?
A)7.5 units per hour
B)12 units per hour
C)15 units per hour
D)20 units per hour

Accepted Answer

The production rate is the reciprocal of the total time per unit. The total time per unit is the sum of the processing times and the wait times. The processing times are 5 minutes, 8 minutes, 3 minutes, and 4 minutes, for a total of 20 minutes. The wait times are 5 minutes, 15 minutes, 12 minutes, and 8 minutes, for a total of 40 minutes. The total time per unit is therefore 20 minutes + 40 minutes = 60 minutes. The production rate is therefore 1 / 60 minutes per unit = 1 unit per 60 minutes = 1 unit per hour.

Question 10

What is the usual formula for calculating product costs for value streams with multiple products?
A)Total value stream cost of period/Units shipped for period
B)Budgeted value stream cost of period/Units shipped for period
C)Total value stream cost of period/Units sold for period
D)Budgeted value stream cost of period/Forecasted units shipped for period

Accepted Answer

The usual formula for calculating product costs for value streams with multiple products is the total value stream cost of the period divided by the units shipped for that period. This method allocates the total costs incurred by the value stream across all units shipped, providing a simple way to assign costs in environments where multiple products share processes or resources.

Question 11

Which of the following is considered a major source of waste?
A)waiting
B)joint products
C)production of needed goods
D)zero-defects products

Accepted Answer

Waiting is considered a major source of waste in many production processes as it leads to delays, idle time and reduced efficiency. Joint products are not waste as they are products produced in combination with others, and production of needed goods and zero-defect products are not considered waste as they are essential to meeting customer and market demands.

Question 12

Which of the following is considered a major source of waste?
A)costs spent on defect detection
B)necessary movement of goods
C)necessary transport of goods
D)design of goods and services that don't meet the needs of the customer

Accepted Answer

Design of goods and services that don't meet the needs of the customer is considered a major source of waste because it results in products or services that won't be used or valued by the customer. This leads to wasted resources, time, and effort in designing and producing these goods and services.

Question 13

Why is units shipped instead of units produced used as the denominator in the calculation of product costs for value streams with multiple products?
A)It reduces conversion costs assigned to the value stream.
B)It motivates managers to reduce inventories.
C)Units shipped are always greater than units produced.
D)Units produced encourages managers to increase inventory.

Accepted Answer

Using units shipped as the denominator encourages managers to focus on reducing inventory levels and aligning production with actual demand, rather than producing excess units that may not be immediately needed.

Question 14

How is overproduction of good controlled in lean manufacturing?
A)by encouraging zero setup times
B)by having management set the levels of production
C)by allowing for the maximizing customer value
D)by letting customers pull goods through the system

Accepted Answer

In lean manufacturing, the focus is on producing only what the customer needs and when they need it. This is achieved by implementing a pull system where customers signal their demand for products and only then are the products produced. This helps to prevent overproduction of goods and ensures that resources are only used when necessary.

Question 15

Why might labour costs be reduced in a value stream system?
A)The reduction causes an elimination of the need for any specialized skilled employees such as industrial engineers or production schedulers.
B)The labour costs of industrial engineers and production schedulers can be pooled and allocated to the value streams.
C)Some of the workers can be cross-trained to perform value-added activities within the value stream.
D)Typically,implementing value stream results in layoffs of many workers.

Accepted Answer

In a value stream system, there is a focus on eliminating waste and improving efficiency, which often leads to cross-training workers to perform a variety of tasks within the value stream. This reduces the need for specialized skilled employees and can also result in a more flexible and adaptable workforce. Additionally, by eliminating non-value-added activities and improving overall efficiency, the value stream system can reduce the need for excess labor and ultimately lower labor costs. Option A is incorrect because specialized skilled employees may still be needed in a value stream system, but their role may shift to be more focused on continuous improvement rather than daily operations. Option B is incorrect because allocating the labor costs of industrial engineers and production schedulers to value streams does not necessarily reduce overall labor costs. Option D is also incorrect because while there may be some layoffs initially, the overall goal of a value stream system is to create a more efficient and effective workforce, which should ultimately benefit employees and the organization as a whole.

Question 16

How is production triggered in a demand-pull system?
A)by a forecast
B)by a customer order
C)by a vendor shipment
D)by an economic reorder point

Accepted Answer

In a demand-pull system, production is triggered by customer orders. The system is designed to respond to customer demand in real-time, with production only occurring as needed to fulfill orders. This helps to minimize inventory costs and improve customer satisfaction. The other options listed (forecasting, vendor shipment, and economic reorder point) are not typically used to trigger production in a demand-pull system.

Question 17

The following information relates to Ramesy Manufacturing:
To produce a unit of product
$$\begin{array} { l l } 
\text { Cutting Deparment } & 5 \text { mintes per unit } \
\text { Welding Department } & 8 \text { minutes per unit } \
\text { Polishing Department } & 3 \text { minutes per unit } \
\text { Finishing Department } & 4 \text { minutes per unit }
\end{array}$$
There is a wait time of 5 minutes before the Cutting Department begins a batch, 15 minutes between the Cutting and Welding departments, a move and pre-wait between Welding and Polishing of 12 minutes, and a move and pre-wait between the Polishing and Finishing departments of 8 minutes.
-Refer to the figure.If Ramesy produces in batches of 10 units,how much time would have elapsed by the time the 10th unit is produced under a manufacturing cell environment (assuming the cell is processing continuously)?
A)60 minutes
B)65 minutes
C)150 minutes
D)125 minutes

Accepted Answer

The answer of The following information relates to Ramesy Manufacturing:
To...

Question 18

Which of the following is characteristic of a lean accounting system?
A)The cost of people with specialized skills,such as industrial engineers,is allocated to all manufacturing cells based on an activity driver.
B)Workers are multiskilled and responsible for setting up equipment,maintaining equipment,and operating equipment.
C)Implementing a value stream system will require more workers.
D)Workers are highly skilled in one specialized area or activity and are not expected to spend time on other value-added activities.

Accepted Answer

Multiskilled workers who are responsible for multiple tasks are a characteristic of a lean accounting system. This allows for flexibility and efficiency in the production process. A is incorrect because allocating costs based on specialized skills goes against the principle of simplicity in lean accounting. C is incorrect because implementing a value stream system is meant to reduce waste and increase efficiency, not require more workers. D is incorrect because having workers specialize in only one area goes against the principle of cross-training and flexibility in lean accounting.

Question 19

Which of the following is an advantage of a value stream cost assignment?
A)Initially,it may not be possible to allocate all the people needed in a value stream to that stream exclusively.
B)There will always be some individuals whose related costs will remain outside any particular value stream.
C)A value stream is usually organized around a family of products.
D)Having a value stream for each product is not practical.

Accepted Answer

Value stream cost assignment allows for a better understanding of the cost of producing a family of products within a value stream. This is because a value stream is usually organized around a family of products. Therefore, option C is correct. Option A and B are not advantages of a value stream cost assignment. Option D is not relevant to the advantages of value stream cost assignment.

Question 20

The following information relates to Ramesy Manufacturing:
To produce a unit of product
$$\begin{array} { l l } 
\text { Cutting Deparment } & 5 \text { mintes per unit } \
\text { Welding Department } & 8 \text { minutes per unit } \
\text { Polishing Department } & 3 \text { minutes per unit } \
\text { Finishing Department } & 4 \text { minutes per unit }
\end{array}$$
There is a wait time of 5 minutes before the Cutting Department begins a batch, 15 minutes between the Cutting and Welding departments, a move and pre-wait between Welding and Polishing of 12 minutes, and a move and pre-wait between the Polishing and Finishing departments of 8 minutes.
-Refer to the figure.What is the cycle time of operation?
A)16 minutes
B)20 minutes
C)35 minutes
D)60 minutes

Accepted Answer

The cycle time includes the sum of all production and wait times: 5 (wait) + 5 (cutting) + 15 (wait) + 8 (welding) + 12 (wait) + 3 (polishing) + 8 (wait) + 4 (finishing) = 60 minutes.

Quiz 17: Lean Accounting and Productivity Measurement

What is characteristic of the emphasis on departmental efficiency?

What are many overhead costs assigned to in a lean environment?

What is the purpose of the production rate?

What is the only allocation used regularly in a value stream cost assignment?

Why does lean accounting work in a lean manufacturing environment?

If a facility has costs of $100,000 per year and 20,000 square metres,and if 19,000 square metres are absorbed by the value streams,what happens to the unabsorbed cost of the remaining 1,000 metres?

What is the JIT solution?

What is the usual formula for calculating product costs for value streams with multiple products?

Which of the following is considered a major source of waste?

Which of the following is considered a major source of waste?

Why is units shipped instead of units produced used as the denominator in the calculation of product costs for value streams with multiple products?

How is overproduction of good controlled in lean manufacturing?

Why might labour costs be reduced in a value stream system?

How is production triggered in a demand-pull system?

Which of the following is characteristic of a lean accounting system?

Which of the following is an advantage of a value stream cost assignment?