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

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Question 61

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Maximum effectiveness and efficiency are reached when the lean philosophy is used mainly by manufacturers.

A) True
B) False

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Question 62

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Kilbuck Manufacturing operates in a lean manufacturing environment. Kilbuck's actual conversion costs for the month of May follow: Direct and indirect labor $150,000 Machine depreciation 85,000 Maintenance and supplies 60,000 Total conversion costs $295,000 The journal entry to record May's conversion costs will include:

A) a credit to Work in Process Inventory
B) a debit to Raw Materials Inventory
C) a credit to Raw and In Process Inventory
D) a debit to Raw and In Process Inventory

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

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Question 63

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Lead time reduction can be a cost-saving goal for any processed item.

A make-to-order company matches its production schedules to actual customer orders.

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 non-value-added costs.

Lean manufacturing philosophy reduces all of the following except

A backflush accounting system uses work in process inventories as control points between each process step.

Identify the following quality control activities as either value-added or non-value-added. -Processing returned materials

By spending more in costs of controlling quality, the costs of failing to control quality will decrease.

In a lean environment, the journal entry to record conversion costs would include a debit to the raw and in process inventory account.

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

In the lean principles philosophy, unexpected downtime is the result of unreliable processes.

In a lean environment, the journal entry to record raw materials purchases would include a debit to the raw and in process inventory account.

A local college is aggressively working to reduce the time it takes students to enroll for each semester. Which of the following changes would not help achieve this goal?

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 total activity cost.

In a push manufacturing system, raw materials are released to production based on actual customer orders.

Axelgold Company produces parts for the auto industry. Part X2 is machined in Department #1, which has the following budgeted conversion costs: $\begin{array} { l r } \text { Labor } & \$ 330,000 \\\text { Depreciation } & 32,000 \\\text { Maintenance } & 12,000 \\\text { Supplies } & 26,000 \\ \text { Total } & \$ 400,000\end{array}$ All costs are driven by machine hours. Total possible hours for the year are 2,800. It takes .03 hours to machine one unit of Part X2. a) Compute Department #1's budgeted cell conversion cost rate for the current year. Round to the nearest cent. b) Compute Part X2's budgeted cell conversion cost per unit. Round to the nearest cent.

Traditional manufacturing emphasizes all of the following except

Which of the following is characteristic of the lean system?

Identify the following quality control activities as either value-added or non-value-added. -Rework