Question 1

What is kaizen costing? How does activity analysis help reduce costs?

Accepted Answer

Kaizen costing is the effort to reduce c

Question 2

_____ are the resources consumed by the activity in producing its output.

Accepted Answer

A)  Activity inputs 
B)  Activity outputs 
C)  Cost driver analysis 
D)  Value-added activities 
A)  Activity inputs 
B)  Activity outputs 
C)  Cost driver analysis 
D)  Value-added activities

Question 3

At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: As a result of quality improvements, profits have increased by

Accepted Answer

A)  £97,500. 
B)  £61,500. 
C)  £22,500. 
D)  £15,000. 
A)  £97,500. 
B)  £61,500. 
C)  £22,500. 
D)  £15,000.

Question 4

Which of the following process dimensions of the activity-based management model deals with "why"?

Accepted Answer

A)  resources 
B)  cost driver analysis 
C)  activities 
D)  performance measures 
A)  resources 
B)  cost driver analysis 
C)  activities 
D)  performance measures

Question 5

Each unit of product requires 16 pounds of material. Due to scrap and rework, each unit has been averaging 18 pounds of material. The material costs £6 per pound. If the company wants to reduce nonvalue-added costs by 25 percent next year, the currently attainable standard for material would be

Accepted Answer

A)  16.00 pounds. 
B)  16.80 pounds. 
C)  17.50 pounds. 
D)  18.00 pounds. 
A)  16.00 pounds. 
B)  16.80 pounds. 
C)  17.50 pounds. 
D)  18.00 pounds.

Question 6

The following reasons have been offered for holding inventories:
1. To balance ordering or setup costs and carrying costs
 
2. To satisfy customer demand (e.g., meet delivery dates)
 
3. To avoid shutting down manufacturing facilities because of
 (a) machine failure
 (b) defective parts
 (c) unavailable parts
 
4. Unreliable production processes
 
5. To take advantage of discounts
 
6. To hedge against future price increases
Required:
a. Explain how the JIT approach responds to each of these reasons and, consequently, argues for insignificant levels of inventories.
 
b. The theory of constraints (TOC) criticizes the JIT approach to inventory management, arguing that it fails to protect throughput. Explain what this means and describe how TOC addresses this issue.

Accepted Answer

The answer of The following reasons have been offered for...

Question 7

At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: For the current year, prevention costs are what percentage of sales?

Accepted Answer

A)  1.50% 
B)  0.65% 
C)  0.15% 
D)  0.05% 
A)  1.50% 
B)  0.65% 
C)  0.15% 
D)  0.05%

Question 8

The Kanban system is used to

Accepted Answer

A)  ensure parts or materials are available when needed 
B)  signal when preventive maintenance is needed 
C)  signal when a defective unit has been produced 
D)  ensure idle time of workers is not wasted 
A)  ensure parts or materials are available when needed 
B)  signal when preventive maintenance is needed 
C)  signal when a defective unit has been produced 
D)  ensure idle time of workers is not wasted

Question 9

Quality training programs are

Accepted Answer

A)  prevention costs 
B)  appraisal costs 
C)  internal failure costs 
D)  external failure costs 
A)  prevention costs 
B)  appraisal costs 
C)  internal failure costs 
D)  external failure costs

Question 10

_____ is the effort expended to identify those factors that are the root causes of activity costs.

Accepted Answer

A)  Activity inputs 
B)  Activity outputs 
C)  Cost driver analysis 
D)  Value-added activities 
A)  Activity inputs 
B)  Activity outputs 
C)  Cost driver analysis 
D)  Value-added activities

Question 11

Activity management attempts to

Accepted Answer

A)  identify and eliminate all unnecessary activities. 
B)  increase the efficiency of necessary activities. 
C)  add new activities that increase value. 
D)  do all of the above. 
A)  identify and eliminate all unnecessary activities. 
B)  increase the efficiency of necessary activities. 
C)  add new activities that increase value. 
D)  do all of the above.

Question 12

A withdrawal Kanban specifies

Accepted Answer

A)  how much should be produced to replace inventory 
B)  the quantity that a subsequent process should withdraw from the preceding process 
C)  when customers should be notified to pick up orders 
D)  when suppliers should be notified to deliver more parts 
A)  how much should be produced to replace inventory 
B)  the quantity that a subsequent process should withdraw from the preceding process 
C)  when customers should be notified to pick up orders 
D)  when suppliers should be notified to deliver more parts

Question 13

The strategic objectives of JIT are

Accepted Answer

A)  to increase profits 
B)  to improve a firm's competitive position 
C)  both a and b 
D)  neither a nor b 
A)  to increase profits 
B)  to improve a firm's competitive position 
C)  both a and b 
D)  neither a nor b

Question 14

Rollo Company has developed cost formulas for the drivers of the following production activities: The activity levels are projected to be as follows:
  What is budgeted for this projected activity level?

Accepted Answer

A)  £3,504,450 
B)  £1,655,430 
C)  £295,150 
D)  £165,543 
A)  £3,504,450 
B)  £1,655,430 
C)  £295,150 
D)  £165,543

Question 15

Which of the following is not true about assigning rewards in activity-based responsibility accounting?

Accepted Answer

A)  Rewards are assigned based on budgetary standards. 
B)  Rewards are assigned based on individual as well as team performance. 
C)  Rewards are assigned based on progress towards optimal standards. 
D)  Rewards include bonuses, profit sharing, and gainsharing. 
A)  Rewards are assigned based on budgetary standards. 
B)  Rewards are assigned based on individual as well as team performance. 
C)  Rewards are assigned based on progress towards optimal standards. 
D)  Rewards include bonuses, profit sharing, and gainsharing.

Question 16

With JIT manufacturing, the major variable cost remaining is

Accepted Answer

A)  direct materials 
B)  overhead 
C)  inventory 
D)  direct labour 
A)  direct materials 
B)  overhead 
C)  inventory 
D)  direct labour

Question 17

The following information pertains to Kanyon, SA., for 2004: Quality costs are what percentage of sales?

Accepted Answer

A)  23.5% 
B)  15.0% 
C)  6.0% 
D)  2.5% 
A)  23.5% 
B)  15.0% 
C)  6.0% 
D)  2.5%

Question 18

A time-and-motion study revealed that it should take 3 hours to produce a product that currently takes 7.5 hours to produce. labour is £18 per hour. The nonvalue-added costs are

Accepted Answer

A)  £27. 
B)  £54. 
C)  £81. 
D)  £0. 
A)  £27. 
B)  £54. 
C)  £81. 
D)  £0.

Question 19

A company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average £4,000 per day. A competitor keeps 10 days of inventory on hand, and the competitor's carrying costs average £2,000 per day. The value-added costs are

Accepted Answer

A)  £80,000. 
B)  £40,000. 
C)  £20,000. 
D)  £-0-. 
A)  £80,000. 
B)  £40,000. 
C)  £20,000. 
D)  £-0-.

Question 20

Rollo Company has developed cost formulas for the drivers of the following production activities: If the actual activity was 20 setups and the actual fixed cost for inspections was £28,000 and the variable cost for inspections was £5,000, the total variance for inspections is

Accepted Answer

A)  £2,000 favorable. 
B)  £2,000 unfavorable. 
C)  £1,000 favorable. 
D)  £1,000 unfavorable. 
A)  £2,000 favorable. 
B)  £2,000 unfavorable. 
C)  £1,000 favorable. 
D)  £1,000 unfavorable.

What is kaizen costing? How does activity analysis help reduce costs?

_____ are the resources consumed by the activity in producing its output.

Which of the following process dimensions of the activity-based management model deals with "why"?

Each unit of product requires 16 pounds of material. Due to scrap and rework, each unit has been averaging 18 pounds of material. The material costs £6 per pound. If the company wants to reduce nonvalue-added costs by 25 percent next year, the currently attainable standard for material would be

The Kanban system is used to

Quality training programs are

_____ is the effort expended to identify those factors that are the root causes of activity costs.

Activity management attempts to

A withdrawal Kanban specifies

The strategic objectives of JIT are

Rollo Company has developed cost formulas for the drivers of the following production activities: The activity levels are projected to be as follows: What is budgeted for this projected activity level?

Which of the following is not true about assigning rewards in activity-based responsibility accounting?

With JIT manufacturing, the major variable cost remaining is

The following information pertains to Kanyon, SA., for 2004: Quality costs are what percentage of sales?

A time-and-motion study revealed that it should take 3 hours to produce a product that currently takes 7.5 hours to produce. labour is £18 per hour. The nonvalue-added costs are

A company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average £4,000 per day. A competitor keeps 10 days of inventory on hand, and the competitor's carrying costs average £2,000 per day. The value-added costs are

Rollo Company has developed cost formulas for the drivers of the following production activities: If the actual activity was 20 setups and the actual fixed cost for inspections was £28,000 and the variable cost for inspections was £5,000, the total variance for inspections is

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Strategic Performance Management

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Exam 14: Cost Management

What is kaizen costing? How does activity analysis help reduce costs?

_____ are the resources consumed by the activity in producing its output.

Which of the following process dimensions of the activity-based management model deals with "why"?

Each unit of product requires 16 pounds of material. Due to scrap and rework, each unit has been averaging 18 pounds of material. The material costs £6 per pound. If the company wants to reduce nonvalue-added costs by 25 percent next year, the currently attainable standard for material would be

The Kanban system is used to

Quality training programs are

_____ is the effort expended to identify those factors that are the root causes of activity costs.

Activity management attempts to

A withdrawal Kanban specifies

The strategic objectives of JIT are

Rollo Company has developed cost formulas for the drivers of the following production activities: The activity levels are projected to be as follows: What is budgeted for this projected activity level?

Which of the following is not true about assigning rewards in activity-based responsibility accounting?

With JIT manufacturing, the major variable cost remaining is

The following information pertains to Kanyon, SA., for 2004: Quality costs are what percentage of sales?

A time-and-motion study revealed that it should take 3 hours to produce a product that currently takes 7.5 hours to produce. labour is £18 per hour. The nonvalue-added costs are

A company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average £4,000 per day. A competitor keeps 10 days of inventory on hand, and the competitor's carrying costs average £2,000 per day. The value-added costs are

Rollo Company has developed cost formulas for the drivers of the following production activities: If the actual activity was 20 setups and the actual fixed cost for inspections was £28,000 and the variable cost for inspections was £5,000, the total variance for inspections is

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Strategic Performance Management

Filters