Exam 13: Strategic Cost Management

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 backflush approach?

What are building plants and grouping employees examples of?

What is information for life-cycle cost management supported by?

Prior to installing a JIT system, Clark Company used machine hours to assign maintenance costs to its three products of 4-cm, 6-cm, and 9-cm insulation. The maintenance costs totalled $400,000 per year. The machine hours used by each product and the quantity produced of each product are as follows: 4 12,000 31,250 6 20,000 25,000 9 18,000 12,000 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 $400,000; however,these costs are now traceable to each cell. Cell 4 \ 100,000 Cell, 6 120,000 Cell 9 180,000 -Refer to the figure.What would be the maintenance cost per roll of 4-cm insulation after installing JIT?

What philosophy of quality control does JIT manufacturing use?

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.What is the cost of supplier Z1?

Vibro Company sells a product used in many manufacturing processes. The sales activity involves three activity areas: Activity Area Cost Driver and Rate Order taking \ 100 per purchase order Sales visits \ 50 per visit Delivery vehicles 11 per delivery mile The following customer information is given: AX BY CV DZ Units sold 100,000 80,000 70,000 60,000 List price \ 50 \ 50 \ 40 \ 50 Actual sales price \ 45 \ 48 \ 38 \ 50 Number of purchase orders 30 20 15 10 Number of sales visits 6 5 4 3 Number of deliverv miles 100 80 70 60 -Refer to the figure.Which customer is most profitable?

What is the term for creating better customer value for the same or lower cost than competitors or creating equivalent value for lower cost than offered by competitors?

What viewpoint describes the general sales pattern of a product as it passes through the introduction,growth,maturity,and decline stages?

Vibro Company sells a product used in many manufacturing processes. The sales activity involves three activity areas: Activity Area Cost Driver and Rate Order taking \ 100 per purchase order Sales visits \ 50 per visit Delivery vehicles 11 per delivery mile The following customer information is given: AX BY CV DZ Units sold 100,000 80,000 70,000 60,000 List price \ 50 \ 50 \ 40 \ 50 Actual sales price \ 45 \ 48 \ 38 \ 50 Number of purchase orders 30 20 15 10 Number of sales visits 6 5 4 3 Number of deliverv miles 100 80 70 60 -Refer to the figure.Which customer has the least activity costs?

What is the traditional approach that permits defects to occur as long as they remain under a certain level?

What are activities required to design,develop,produce,market,distribute,and service a product known as?

Which of the following is considered a direct product cost if JIT manufacturing is used and each manufacturing cell produces a single product?

What is the process that analyzes how costs and other financial factors vary as different bundles of activities are considered to strengthen a firm's strategic position?

Fonda Company has a traditional,unit-based cost system.The Calgary plant of Fonda produces eight different electronic products.Each year,100,000 units of all products are produced.The demand for each product is about the same; thus,the average output for each product is 12,500 units.Although the products differ in complexity,each product uses about the same labour time and materials.The plant has used direct labour hours for years to assign overhead to products.The cost accounting department developed the following cost equation to help design engineers understand the assumed cost relationships.(The equation describes the relationship between total manufacturing costs and direct labour hours.The equation is supported by a coefficient of determination of 63 percent): Y = $5,000,000 + $50X where X is the number of direct labour hours The variable rate of $50 is broken down as follows: Direct labour \1 6 Variable overhead 8 Direct materials 26 Because of competitive pressures,product engineering was asked to redesign products to reduce the total cost of manufacturing.Using the above cost relationships,product engineering adopted the strategy of redesigning to reduce direct labour content.As each design was completed,an engineering change order was cut,triggering a series of events such as design approval,vendor selection,bill of materials update,redrawing of schematic,test runs,changes in setup procedures,development of new inspection procedures,and so on. After one year of design change,the normal volume of direct labour was reduced from 125,000 hours to 100,000 hours,with the 100,000 units being built.Although each product differs in its labour content,the redesign efforts reduced the labour content for all products.On average,labour content per unit of product dropped from 1.25 hours per unit to 1 hour per unit.Fixed overhead,however,increased from $5,000,000 to $6,000,000. a.Using normal volume,compute the manufacturing cost per labour hour before the design changes.What is the cost per unit of an "average" product? b.Using the normal volume after the one year of design changes,compute the manufacturing cost per hour.What is the cost per unit of an "average" product?

What strategy is a computer company following when it maintains the internal storage space for a lower price?

What strategy is a computer company following when it targets customers in the Maritimes?

Prior to installing a JIT system, Reilly Company used machine hours to assign maintenance costs to its three products of 4-cm, 6-cm, and 9-cm insulation. The maintenance costs totalled $420,000 per year. The machine hours used by each product and the quantity produced of each product are as follows: 4 6,000 15,000 6 10,000 12,500 9 8,000 11.200 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 $420,000; however,these costs are now traceable to each cell. Cell 4 \ 110,000 Cell, 6 150,000 Cell 9 160,000 -Refer to the figure.What would be the maintenance cost per roll of 9-cm insulation before JIT is installed?

What is the first link of the internal value chain?

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 is least costly?