Exam 13: Strategic Cost Management

Which of the following is a trait of a traditional manufacturing system?

A firm that has implemented JIT had the following transactions: 1. Materials were purchased on account for $\$ 50,000$ . 2. Materials were placed into production. 3. Actual direct labour costs were $\$ 10,000$ . 4. Actual overhead costs were $\$ 40,000$ . 5. Conversion costs applied were $\$ 34,000$ . 6. All work was completed for the month. 7. All completed work was sold. 8. The variance is recognized. A)Provide the journal entries for the above transactions assuming the traditional approach was used. B)Provide the journal entries for a back flush system assuming the second trigger point is the point when goods are completed.

What is the operational activity of setting up equipment classified as?

What is considered a direct cost if traditional manufacturing is used?

What is the term for the difference between the sales price needed to capture a predetermined market share and the desired profit per unit?

Prior to installing a JIT system,Johnson Company used machine hours to assign maintenance costs to its three products of 4-cm,6-cm,and 8-cm plastic pipe. The maintenance costs totalled $540,000 per year.The machine hours used by each product and the quantity produced of each product are as follows: Machine Hours Quantity Produced 4 10,000 3,750 6 14,000 4,000 8 21.000 5,000 After installing JIT,three manufacturing cells were created,and the cell workers were trained to perform maintenance.Maintenance costs for the three cells still totalled $540,000; however,these costs are now traceable to each cell. Cell, 4 \ 90,000 Cell, 6 160,000 Cell 8 290,000 a.Compute the maintenance cost per roll for each type of pipe before JIT is installed. b.Compute the maintenance cost per roll for each type of pipe after JIT is installed. c.Explain why the JIT maintenance cost per roll is more accurate than the cost per roll using the traditional approach.

Which of the following involves choosing among alternative strategies with the goal of selecting a strategy or strategies that provides a company with reasonable assurance of long-term growth and survival?

Rudy Company sells a product for $450 per unit. Its market share is 25 percent. The marketing manager feels that the market share can be increased to 33 percent with a reduction in price to $390. The product is currently earning a profit of $72 per unit. The president of Rudy Company feels that the $72 profit per unit must be maintained. -Refer to the figure.What is the original cost per unit?

Which viewpoint of the product life-cycle is customer-value oriented?

What are plant layout,quality management systems,and providing capacity examples of?

Brad Company developed the following budgeted life-cycle income statement for two proposed products. Each product’s life cycle is expected to be two years. Sales \ 200,000 \ 200,000 \ 400,000 Cost of goods sold Gross profit \ 150,000 Period expenses: Research and development (70,000) Marketing Life-cycle income A 10 percent return on sales is required for new products.Because the proposed products did not have a 10 percent return on sales,the products were going to be dropped. Relative to Product B,Product A requires more research and development costs but fewer resources to market the product.Sixty percent of the research and development costs are traceable to Product A,and 30 percent of the marketing costs are traceable to Product A. -Refer to the figure.What would be the return on sales for Product A?

What stage of the product life cycle is the period of time when sales increase at an increasing rate?

Vitella Company manufactures a product sold to retailers. It is considering suppliers for its process. The supplier quality involves four activity areas: Activit Area Cast Driver and Rate Order cost \ 125 per purchase order Defective units \ 200 per urit internal failure costs Delivery trips \ 5 per delivery kilametre Caryying cost \ 1 per order The following supplier information is given: W4 X3 Y2 Z1 Materials units meeded 100,000 100,000 100,000 100,000 Actual purchase price \ 4.98 55 54.99 \ 5.01 Number of purchase orders 10 20 30 18 Number of defects 3 6 12 0 Nurgher of deliveries 25 20 30 18 -Refer to the figure.Which supplier has the most defective units?

A firm that has implemented JIT had the following transactions: 1. Materals were purchased an account for $40,000 2. Materials were placed inta production. 3. Actual direct labour costs were $6,000. 4. Actual averhead costs were $40,000. 5. Conversion costs applied were $42,000. 6. All work was completed for the month. 7. All completed work was sald. 8. The variance is recoprized. -Refer to the figure.Which of the following would NOT be an entry under the back flush system,assuming the second trigger point is the completion of goods?

A firm that has implemented JIT had the following transactions: 1. Materals were purchased an account for $40,000 2. Materials were placed inta production. 3. Actual direct labour costs were $6,000. 4. Actual averhead costs were $40,000. 5. Conversion costs applied were $42,000. 6. All work was completed for the month. 7. All completed work was sald. 8. The variance is recoprized. -Refer to the figure.What will be the entry to record material purchases using the traditional approach?

What is product-costing information not used for in a JIT manufacturing environment?

A firm that has implemented JIT had the following transactions: 1. Materals were purchased an account for $60,000 2. Materials were placed inta production. 3. Actual direct labour costs were $14,000. 4. Actual averhead costs were $50,000. 5. Conversion costs applied were $54,000. 6. All work was completed for the month. 7. All completed work was sald. 8. The variance is recoprized. A)Provide the journal entries for the above transactions assuming the traditional approach was used. B)Provide the journal entries for a back flush system assuming the second trigger point is the point when goods are sold.

Rudy Company sells a product for $450 per unit. Its market share is 25 percent. The marketing manager feels that the market share can be increased to 33 percent with a reduction in price to $390. The product is currently earning a profit of $72 per unit. The president of Rudy Company feels that the $72 profit per unit must be maintained. -Refer to the figure.What is the target price per unit?

At what stage of the product life cycle is a product when it loses market acceptance?

Brad Company developed the following budgeted life-cycle income statement for two proposed products. Each product’s life cycle is expected to be two years. Sales \ 200,000 \ 200,000 \ 400,000 Cost of goods sold Gross profit \ 150,000 Period expenses: Research and development (70,000) Marketing Life-cycle income A 10 percent return on sales is required for new products.Because the proposed products did not have a 10 percent return on sales,the products were going to be dropped. Relative to Product B,Product A requires more research and development costs but fewer resources to market the product.Sixty percent of the research and development costs are traceable to Product A,and 30 percent of the marketing costs are traceable to Product A. -Refer to the figure.What would be the life-cycle income for Product B if research and development costs and marketing costs are traced to each product?