Exam 11: Strategic Cost Management

Prior to installing a JIT system, Johnson Company used machine hours to assign maintenance costs to its three products of 4-inch, 6-inch, and 8-inch plastic pipe. The maintenance costs totaled $540,000 per year.The machine hours used by each product and the quantity produced of each product are as follows: After installing JIT, three manufacturing cells were created, and the cell workers were trained to perform maintenance.Maintenance costs for the three cells still totaled $540,000; however, these costs are now traceable to each cell. Required:

In a JIT manufacturing environment, product-costing information is used mainly for all of the following EXCEPT

_______________ is the length of time that a product serves the needs of customers.

_______________ defines stages of the life cycle by changes in the type of activities performed.

The _______________ is when the product loses market acceptance.

Figure 11-2 Vibro Company sells a product used in many manufacturing processes.The sales activity involves three activity areas: The following customer information is given: - Refer to Figure 11-2.Which customer has the least activity costs?

Chris Company sells a product for $225 per unit.Its market share is 20 percent.The marketing manager feels that the market share can be increased to 30 percent with a reduction in price to $195.The product is currently earning a profit of $36 per unit. -The president of Chris Company feels that the $36 profit per unit must be maintained.What is the target price per unit?

Figure 11-4 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. 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. - If research and development costs and marketing costs are traced to each product, life-cycle income for Product B would be

The _______________ is a period of time when sales increase at a decreasing rate.

Which of the life-cycle viewpoints is the cost-oriented viewpoint?

Which of the following manufacturing costs is assigned to products in a JIT environment using allocation?

_______________ are relationships among activities that are performed with a firm's portion of the value chain.

When a computer company targets customers in the South, it is following a

Life-cycle cost management emphasizes

_______________ describes the general sales pattern of a product as it passes through the introduction, growth, maturity, and decline stages.

The operational activity of setting up equipment is classified as a

Figure 11-1 Clinton Corp.is a manufacturer of equipment used in manufacturing.It currently produces a product with 30 parts but through redesign has reduced the number of parts to 9.Then current activity capacity and demand for the 30 unit configuration and expected activity demand for the 9 part configuration are provided below: Materials usage has a rate of $5 per part and no fixed costs.Assembly has a rate of $20 per labor hour with no fixed component.Purchasing requires clerks that can process 5,000 purchase orders.Each clerk earns $40,000 per year.There is also a $1 per order processing cost. - Refer to Figure 11-1.What is the savings in materials usage cost with the new design changes?

Spencer Manufacturing Company sells a product for $200 per unit.Its market share is 18 percent of the units sold.The marketing manager feels that the market share can be increased to 25 percent of the units sold with a reduction in price to $170.The product is currently earning a profit of $32 per unit.The president of Spencer Manufacturing Company feels that his company needs to maintain the same profit level per unit.The market share consists of $2,000,000 (10,000 units). Required:

The total product is the complete range of _______________ that a customer receives from a purchased product.

A firm that has implemented JIT had the following transactions: - What will be the entry to record material purchases using the traditional approach?