Accounting 202 Ch.6

Both C and D Transfer of chairs from the assembly line to the staining facility. Storage of completed bookcases in inventory.

Factory Oak produces various wooden bookcases, tables, storage units, and chairs. Which of the following would be included in a listing of the company's non-value-added activities?

request normal delivery times

Generally speaking, companies prefer doing business with customers who:

Order Size: 300 Quality Purchased: 9

Harold Corporation recently abandoned its traditional production and inventory system in favor of a just-in-time system. The company typically ordered 700 units of raw material at a time and purchased units that scored a 7 on a 10-point quality scale, with 10 being very close to perfection. All other things being equal, which of the following choices denotes a likely scenario under the just-in-time system?

Required Sales Contract: Few Account Payment Patterns: Rapid Design/Engineering Change Orders: Few

Horton Corporation's customers differ greatly with respect to number of required sales contacts (e.g., phone calls and sales visits), account payment patterns, and design/engineering change orders. Which of the following choices likely denotes an ideal customer from Horton's perspective?

Purchase-order cost is decreasing and unit storage cost is increasing.

Hudson, Inc., is considering a change from a traditional purchasing system to a just-in-time purchasing system. What has probably happened to Hudson's cost per purchase order and inventory unit storage cost to prompt the company to consider such a change?

do "A," "B," and "C" above. reduce the scope of selected activities. eliminate selected activities combine selected activities.

In an attempt to cut non-value-added costs, companies may:

nothing is manufactured at a work center until a need is signaled from a subsequent process.

In the pull method of coordinating a production process:

small, continual cost reductions during the manufacturing phase of a product.

Kaizen costing refers to:

demand pull

Marion Corporation, which produces unique office furniture, recently installed a just-in-time production system. The various steps in the company's manufacturing process are coordinated by using a philosophy known as:

Calculate a target profit.

Of the five tasks that follow, which one is typically performed second when using the concept known as target costing?

$2

Robertson, Inc., uses target costing and sells a product for $36 per unit. The company seeks a profit margin equal to 25% of sales. If the current manufacturing cost is $29 per unit, the firm will need to implement a cost reduction of:

Number of Suppliers: 35 Number of Orders: 750

Roger Corporation recently abandoned its traditional production and inventory system in favor of a just-in-time system. The company typically dealt with 50 suppliers and placed 450 orders throughout the year. All other things being equal, which of the following choices denotes a likely scenario under the just-in-time system?

$300

Stanley Corporation takes eight hours to complete the setup process for a certain electrical component, with the setup cost averaging $150 per hour. If the company's competitor can accomplish the same process in six hours, Stanley's non-value-added cost would be:

benchmarking.

The comparison of a company's practices and performance levels against those of other organizations is most commonly known as:

the theory of constraints.

The contemporary management tool that focuses on restrictions that limit a company's ability to maximize long-run profit is commonly known as:

target costing

The costing technique that produces a stipulated profit when a product is sold at its estimated market-driven price is termed:

2,4,3,1

The four tasks that follow take place in the concept known as target costing: 1—Value engineering. 2—Establish a target selling price. 3—Establish a target cost. 4—Establish a target profit. Which of the following choices correctly depicts the sequence of these tasks?

Kaizen costing

The process of continual cost reduction during the manufacturing phase of an existing product is termed:

lower inventories and fewer units purchased on a given order.

When a company adopts a just-in-time inventory system, it would expect:

lower inventories and more frequent purchases.

When a company adopts a just-in-time inventory system, it would expect:

Quality of Purchases: Increase Number of Suppliers: Decrease

When a company switches from a traditional system to a just-in-time production and inventory system, what often happens to the quality of raw material purchased and the number of vendors that supply the firm?

All of the above Number of required sales contacts (phone calls, visits, etc.). Special shipping instructions. Accounts receivable collection time. Purchase-order changes.

Which of the following can have a negative impact on a sale's profitability?

Raw Material Inventory: Yes Work-in-Process Inventory: Yes Finished Goods Inventory: Yes

Which of the following inventories would a company try to reduce and/or eliminate under a just-in-time system?

A, B, and C The cost of servicing a customer computed as a percentage of the customer's gross margin. The cost of servicing a customer computed as a percentage of the customer's gross margin, compared against company or industry norms. The cost of servicing a customer computed as a percentage of the customer's gross margin, examined over several years.

Which of the following is an appropriate way to analyze customer profitability?

Purchases of materials in relatively large amounts (i.e., lot sizes).

Which of the following is not a key feature of a JIT system?

Raw materials are stockpiled to avoid production disruptions.

Which of the following statements about a just-in-time (JIT) purchasing system is false?

I, II, and III Re-engineering is the complete redesign of a process in an attempt to find creative new ways to accomplish an objective. Re-engineering involves more of a "giant leap" than the concept of kaizen. Re-engineering may entail high risks.

Which of the following statements about re-engineering is (are) true?

I, II, and III Quality control by the supplier is more crucial. Adherence to delivery schedules by vendors is more crucial. Long-term supplier contracts are common.

Which of the following statements is (are) true about JIT purchasing as compared with conventional purchasing systems?

I, II, and III Non-value-added activities are often unnecessary and dispensable. Non-value-added activities may be necessary but are being performed in an inefficient and improvable manner. Non-value-added activities can be eliminated without deterioration of product quality, performance, or perceived value.

Which of the following statements is (are) true about non-value-added activities?

I and III Materials are purchased and goods are produced only as required. A JIT system is characterized by many small purchases of raw materials.

Which of the following statements regarding a JIT system is (are) true?

I, II, and III JIT requires quality production facilities, methods, and employees. JIT requires the acquisition of quality raw materials. JIT requires that long-term contracts be negotiated with quality suppliers.

Which of the following statements regarding quality is (are) true for a company that has implemented a JIT system?

I, II, and III Goods are produced in each manufacturing stage only as they are needed at the next stage. The pull method greatly reduces work-in-process inventory. The pull method reduces waiting time and the associated non-value-added cost.

Which of the following statements regarding the pull method is (are) true?

Product costing.

Which of the following techniques does not logically belong with the others?

Use of overhead application rates.

Which of the following would least likely be a feature or goal that is associated with a kaizen-costing program?

initiates production in a particular work center.

A Kanban:

raw-material inventory, work-in-process inventory, and finished-goods inventory.

A company that adopts a just-in-time production system would attempt to reduce and/or eliminate:

has relatively few suppliers and has deliveries of purchased items made in small lot sizes immediately before the goods are needed in production.

A firm that uses a JIT purchasing philosophy probably:

storage of the vehicle in the sales area

Airstream builds recreational motor homes. All of the following activities add value to the finished product except:

$35

Collins Corporation uses target costing and sells a product for $50 per unit. The company seeks a profit margin equal to 40% of sales. If target-costing calculations revealed a need for a $5 cost reduction, the firm's current manufacturing cost must be:

activity-based costing.

Customer profitability analysis is tied closely to:

$364

During a recent accounting period, Marty's shipping department processed 26 orders. Each order typically takes four hours to complete; however, the average time increased to five hours because of various departmental inefficiencies. If shipping labor is paid $14 per hour, the company's non-value-added cost would be: