Question 1

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

Accepted Answer

Parts manufacturing is a key activity in the supply chain of a manufacturer as it involves the creation of the materials or components needed to produce the final product. Shipping and customer service may be part of the distribution or sales process, while research and development is involved in the design and improvement of the product but may not necessarily be part of the supply chain.

Question 2

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

Accepted Answer

The answer of Which of the following activities would be...

Question 3

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

Accepted Answer

In a backflush costing system, the number of entries and the number of ledger accounts decrease as the tracking of individual costs is eliminated and costs are only recorded when products are completed.

Question 4

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

Accepted Answer

Lean methodology aims to identify and eliminate all forms of waste in business processes, including overproduction, waiting, defects, excess inventory, unnecessary motion, and overprocessing.

Question 5

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

Accepted Answer

The answer of Traditional costing and backflush costing provide the...

Question 6

Full product cost includes

Accepted Answer

Full product cost includes both direct labor and direct material costs, as well as all production and nonproduction costs. This encompasses all costs associated with bringing a product to market, from the raw materials to the labor required to produce it, to any overhead or administrative costs incurred in the process. Only including nonproduction costs, direct material costs, or direct labor costs would not give a complete picture of the total cost of production.

Question 7

From the four selections below, identify which are necessary to develop the value chain of a product or service. 
1. Processes 
2. Departments
3. Nonvalue-adding activities
4. Value-adding activities

Accepted Answer

Processes and value-adding activities are necessary to develop the value chain of a product or service. Departments and nonvalue-adding activities may be part of the value chain but are not necessary for its development. Therefore, choice C (1 and 4) is the best answer.

Question 8

Customer relations are usually part of

Accepted Answer

Customer relations are a crucial factor in creating customer value and satisfaction, which is a part of the value chain. It is not related to the supply chain, which deals with the procurement and movement of goods and services from suppliers to customers.

Question 9

Nonvalue-adding activities

Accepted Answer

Nonvalue-adding activities add cost to a product or service but do not increase its market value. They can include activities such as excess inventory, unnecessary transportation, excessive inspection, and inefficient processes. While some nonvalue-adding activities may be necessary for regulatory compliance or safety, they should be minimized to reduce costs and improve efficiency.

Question 10

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

Accepted Answer

In backflush costing, only two inventory accounts are used - finished goods inventory and cost of goods sold - instead of the three accounts used in traditional costing (raw materials inventory, work-in-process inventory, and finished goods inventory).

Question 11

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

Accepted Answer

Activity-based costing can be applied to both production-related and non-production-related activities. It aims to allocate costs based on the specific activities that drive those costs, not just the volume of production. Therefore, it can be used in a wide range of industries beyond just manufacturing.

Question 12

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

Accepted Answer

The ending balance of the Cost of Goods Sold account is determined by the total cost of goods sold during the accounting period, which is the same under both traditional and backflush costing. Therefore, the answer is true and option A is correct.

Question 13

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.

Accepted Answer

Both ABM and JIT have as their goal the reduction or elimination of nonvalue-adding activities, as well as the optimization of resource allocation.

Question 14

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

Accepted Answer

Lean philosophy follows the just-in-time (JIT) manufacturing approach and seeks to reorganize activities to be performed within work cells to improve efficiency and reduce waste.

Question 15

Which of the following statements is true?

Accepted Answer

A company's supply chain includes the value chains of its suppliers. This means that a company's supply chain includes the activities that are required to bring a product or service from the raw materials stage to the end user, and this includes the value chains of the suppliers who are providing the raw materials or components. Therefore, statement C is true. Statement A is false because a company's value chain is a part of its supply chain. Statement B is partially true because while a manufacturer's supply chain can include research and development and customer service, it typically includes many other activities as well. Statement D is false because a company's supply chain includes the value chains of its suppliers, not the suppliers of its suppliers.

Question 16

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

Accepted Answer

The answer of Process value analysis (PVA) identifies all activities...

Question 17

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.

Accepted Answer

Backflush costing delays the recording of costs until the end of the production cycle, eliminating the need for journal entries throughout the process.

Question 18

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

Accepted Answer

In a traditional environment, costs are allocated to the different production departments as products or services move through the production process. This helps to determine the cost of producing the product or service.

Question 19

Backflush costing aims at decreasing waste in the production process.

Accepted Answer

Backflush costing is an accounting system that focuses on recording costs after the production process is complete, primarily to simplify the tracking of costs and reduce accounting work, rather than directly aiming at decreasing waste in the production process.

Question 20

Activity-based management includes all of the following except identifying

Accepted Answer

Activity-based management focuses on identifying and managing the resources consumed by each activity, considering them as value-adding or non-value-adding, and making decisions based on that information. It is not specifically focused on measuring customer satisfaction with a product or service.

Quiz 4: Value-Based Systems- Abm and Lean