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Exam 27: Cost Management for Just-In-Time Environments

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Question 41

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Lead time reduction can be a cost-saving goal for any processed item.

A) True
B) False

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Question 42

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In a just-in-time (JIT) environment, the journal entry to record conversion costs would include a debit to the manufacturing overhead control account.

A) True
B) False

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Question 43

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Under a JIT environment, employees have the responsibility and authority to

Extreme Wreaths, Inc. makes wreaths in batch sizes of 15 at a time. The cutting & assembly process takes 10 minutes per wreath, and the decorating process time is 7 minutes per wreath. It takes 5 minutes to move the wreaths from the cutting & assembly process to the decorating process. In a effort to improve the lead time, the company has tried reducing the batch size to 10 units. The new process is as follows: cutting & assembly process - 8 minutes. The decorating process is still 7 minutes per wreath. It takes 5 minutes to move the wreaths from the cutting & assembly process to the decorating process. (a) Compute the value-added, non-value-added, and the total lead time of the wreath process for both the old and the new manufacturing process. (b) Compute the value-added ratio for both the old and new process. Round to the nearest decimal.

____ manufacturing deals with several suppliers in hopes of finding the best price.

By spending more in costs of controlling quality, the costs of failing to control quality will decrease.

Schedule of Activity Costs From the above schedule of activity costs, determine the value-added costs.

One inherent risk to using just-in-time philosophy is that companies are at higher risk of inventory shortage during volatile times such as strikes, weather, etc. than the traditional philosophy.

Schedule of Activity Costs From the above schedule of activity costs, determine the external failure costs.

Just-in-Time (JIT) manufacturing favors organizing work around products rather than around processes.

Just-in-Time (JIT) manufacturing is also called make-to-stock manufacturing.

In a push manufacturing system, raw materials are released to production based on forecasted demand.

Lead time includes both value-added time and non-value-added time.

The local college is aggressively working in reducing the time that a student needs to enroll for each semester. Which of the following changes would not help achieve this goal?

In a just-in-time (JIT) system, direct labor is included in conversion costs.

In a just-in-time (JIT) environment, process problems are less visible than they are in a traditional environment.

Which of the following is characteristic of a just-in-time (JIT) production layout?

Tucha Manufacturing Co. operates in a just-in-time (JIT) manufacturing environment. The company had scheduled production of 95,000 units during February in its Y12 cell. Actual February production totaled 88,200 units. Tucha had budgeted conversion costs for February totaling $800,000 and budgeted production hours totaling 2,000. Compute Tucha's budgeted cell conversion cost per unit for Cell Y12.

In a just-in-time (JIT) environment, process problems are more visible than they are in a traditional environment because:

Non-financial accounting information is used more often for long-term operating decisions than is financial information.