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Exam 12: Lean Principles, Lean Accounting, and Activity Analysis

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Question 31

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In a lean 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 32

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

A) True
B) False

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Question 33

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The Bright Lamp Company has budgeted its conversion cost for the small lamp production as $85,000 for 1,300 production hours.Each unit produced by the cell requires 15 minutes of process time.During the month, 3,800 units are manufactured in the cell.The estimated material cost is $18 per unit.Provide the following journal entries. a Materials are purchased to produce 4,000 units. b Conversion costs are applied to 3,800 units of production.Please round to nearest cent. c 3,650 units are placed into finished goods.

Lead time is the process time between start and completion.

From the above schedule of activity costs, determine the total activity cost.

The budgeted cell conversion cost rate includes which of the following?

A setup is the time required to prepare an operation for a new production run.

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

Setups are a significant time-consuming activity in traditional production environments.

In a lean system, the work in process and raw materials inventory accounts are combined.

Financial accounting information is used more often for long-term operating decisions and nonfinancial information is used more often for day-to-day decisions.

Examples of transforming a traditional manufacturing environment to a lean environment is to do all of the following except

It is easier to quantify costs of controlling quality than the costs of failing to control quality.

Reducing wait time is not linked to reducing inventory.

Which of the following is characteristic of the lean system?

Identify the following quality control activities as either value-added or non-value-added. -Scrap material

Within-batch wait time increases total lead time.

Identity the following by their type of quality cost. -Preventive machine maintenance

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

In a lean system, direct labor is included in conversion costs.