Chapter 15—Lean Accounting and Productivity Measurement Key
1. Lean manufacturing is concerned with eliminating waste in manufacturing processes.
2. Lean manufacturing adds value by reducing labor costs.
3. Customer value is the difference between what a customer receives and what they give up.
4. The value stream focuses on just value-added activities.
5. Employee empowerment is a major difference between traditional and lean environments.
6. Changes in product-costing and operational control approaches are crucial to a value-stream based lean
manufacturing system.
7. Productivity is concerned with the efficiency of input usage in producing output.
8. The two lean accounting approaches are average-costing and value-stream cost reporting.
9. Implementing the value-stream structure requires an increase in employees.
10. Value-stream costing reports the actual revenues and actual costs on a weekly basis for each value stream.
11. A Box Scorecard is used by the lean control system to compare operational, capacity, and financial figures
12. Technical efficiency is concerned with a given input using no more than needed output.
13. Allocating efficiency chooses the least costly, technically efficient combination of inputs.
14. Productivity measurement is a quantitative assessment of increases or decreases in productivity.
15. Operational partial measures are difficult to interpret by those within an organization.
16. The productivity measure of all inputs simultaneously is called total productivity measurement.
17. Profile measurement provides a series of profiles for all operational measures.
18. Profit-linked productivity measurement involves the measuring of the amount of profit related to
productivity change.
19. Partial measures allow managers to focus on the use of the total production and are easily interpreted.
20. The disadvantage of using partial measures in isolation is that it can be misleading.
21. The worth of one or more features of a product for which customers are willing to pay is called __________
.
22. Identifying value streams may be accomplished by using a two-dimensional matrix where __________ are
listed on one dimension, and __________ on a second dimension.
23. The departments or cells that contain all the related operations needed to produce a family of products are
called __________ .
24. Maximizing customer value, on-demand production, and zero setup times are realized in the pursuit
of __________ .
25. The __________ is used by the lean control system to compare operational, capacity, and financial metrics.
26. In a lean environment, many overhead costs are assigned to products as directly __________ costs.
27. __________ allocation is the only allocation used regularly in a value stream cost assignment.
28. The accounting approach designed to support and encourage lean manufacturing is called __________
accounting.
29. The point at which technical and allocative efficiency are achieved is called __________ efficiency.
30. The achievement of __________ efficiency and __________ efficiency is the point of total productive
efficiency.
31. The process of producing output efficiently using the least amount of inputs is
called __________ .
32. The quantitative assessment of productivity changes is called __________ measurement.
33. The component which provides a server or vector of separate and distinct partial operational measures is
called __________ measurement.
34. An assessment of productive efficiency for all inputs combined is called __________ measurement.
35. The difference between the total profit change and the profit-linked productivity change is
called the __________ component.
36. Lean manufacturing benefits of better quality, reduced lead times, inventory reductions, and reduced setup
times result in
37. Lean manufacturing is best defined as
38. Which of the following is NOT a characteristic of a lean manufacturing system?
39. A difference between Toyota’s lean manufacturing system and Ford’s lean enterprise system is
40. Which is NOT a benefit of lean manufacturing?
41. Lean manufacturing shares many of the same methodologies as
42. Identification of a “value stream,” pursuit of perfection, and making value flow without interruption are
examples of
43. The worth of one or more features of a product for which the customer is willing to pay is defined as:
44. To identify value streams using a two-dimensional matrix, the following two items must be utilized:
45. The value stream
46. The order fulfillment value stream focuses on
47. The new product value stream focuses on
48. There are two basic types of non-value added activities. They are
49. The processing department can produce one unit every 5 minutes and is the last department before the
finishing department. Under traditional manufacturing where a batch equals 10 units, how long will it be before
the first unit in the batch can move from the processing department to the finishing department?
50. In a traditional manufacturing setup
51. Reducing the time it takes to configure equipment to produce a different product is an example of
52. The departments or cells which contain all the operations in close proximity that are needed to produce a
family of products.
53. Figure 15-1
The following information relates to Lancashire Manufacturing:
To produce a unit of product:
Mixing department
3 minutes per unit
Molding department
5 minutes per unit
Casting department
7 minutes per unit
Finishing department
4 minutes per unit
There is a wait time of 8 minutes before the mixing department begins a batch, 5 minutes between the mixing and molding departments, a move and
pre-wait between molding and casting of 10 minutes, and a move and pre-wait between the casting and finishing departments of 12 minutes.
Refer to Figure 15-1. How long does it take to produce a batch of 20 units under a traditional manufacturing approach?
54. Figure 15-1
The following information relates to Lancashire Manufacturing:
To produce a unit of product:
Mixing department
3 minutes per unit
Molding department
5 minutes per unit
Casting department
7 minutes per unit
Finishing department
4 minutes per unit
There is a wait time of 8 minutes before the mixing department begins a batch, 5 minutes between the mixing and molding departments, a move and
pre-wait between molding and casting of 10 minutes, and a move and pre-wait between the casting and finishing departments of 12 minutes.
Refer to Figure 15-1. Which area represents the bottleneck operation?
55. Figure 15-1
The following information relates to Lancashire Manufacturing:
To produce a unit of product:
Mixing department
3 minutes per unit
Molding department
5 minutes per unit
Casting department
7 minutes per unit
Finishing department
4 minutes per unit
There is a wait time of 8 minutes before the mixing department begins a batch, 5 minutes between the mixing and molding departments, a move and
pre-wait between molding and casting of 10 minutes, and a move and pre-wait between the casting and finishing departments of 12 minutes.
Refer to Figure 15-1. What is the production rate?
56. Figure 15-1
The following information relates to Lancashire Manufacturing:
To produce a unit of product:
Mixing department
3 minutes per unit
Molding department
5 minutes per unit
Casting department
7 minutes per unit
Finishing department
4 minutes per unit
There is a wait time of 8 minutes before the mixing department begins a batch, 5 minutes between the mixing and molding departments, a move and
pre-wait between molding and casting of 10 minutes, and a move and pre-wait between the casting and finishing departments of 12 minutes.
Refer to Figure 15-1. How long would it take to process the first unit of a 20-unit batch under a cellular manufacturing setup?
57. The production rate
58. In a demand-pull system
59. Figure 15-2
The following information relates to Cranmore Manufacturing:
To produce a unit of product:
Cutting department
5 minutes per unit
Welding department
8 minutes per unit
Polishing department
3 minutes per unit
Finishing department
4 minutes per unit
There is a wait time of 5 minutes before the cutting department begins a batch, 15 minutes between the cutting and welding departments, a move and
pre-wait between welding and polishing of 12 minutes, and a move and pre-wait between the polishing and finishing departments of 8 minutes.
Refer to Figure 15-2. What is the cycle time of operation?
60. Figure 15-2
The following information relates to Cranmore Manufacturing:
To produce a unit of product:
Cutting department
5 minutes per unit
Welding department
8 minutes per unit
Polishing department
3 minutes per unit
Finishing department
4 minutes per unit
There is a wait time of 5 minutes before the cutting department begins a batch, 15 minutes between the cutting and welding departments, a move and
pre-wait between welding and polishing of 12 minutes, and a move and pre-wait between the polishing and finishing departments of 8 minutes.
Refer to Figure 15-2. If Cranmore produces in batches of 10 units, how much time would have elapsed by the time the 10th unit is produced under a
manufacturing cell environment (assuming the cell is processing continuously)?
61. Figure 15-2
The following information relates to Cranmore Manufacturing:
To produce a unit of product:
Cutting department
5 minutes per unit
Welding department
8 minutes per unit
Polishing department
3 minutes per unit
Finishing department
4 minutes per unit
There is a wait time of 5 minutes before the cutting department begins a batch, 15 minutes between the cutting and welding departments, a move and
pre-wait between welding and polishing of 12 minutes, and a move and pre-wait between the polishing and finishing departments of 8 minutes.
Refer to Figure 16-2. What is the production rate?
62. The JIT solution
63. Which of the following is NOT considered a major source of waste?
64. The pursuit of perfection is realized in
65. Which of the following is NOT considered a major source of waste?
66. Which of the following is true in regards to a lean accounting system?
67. Which of the following is a reason traditional costing approaches may NOT work in a lean manufacturing
environment?
68. Emphasis on departmental efficiency
69. In a lean environment, many overhead costs are assigned to
70. Why might labor costs be reduced in a value stream system?
71. The only allocation used regularly in a value stream cost assignment is
72. With multiple products in a value stream, unit cost will increase if
73. If a facility has costs of $100,000 per year and 20,000 square feet, and if 19,000 square feet are absorbed by
the value streams, what happens to the unabsorbed cost of the remaining 1,000 feet?
74. Which of the following is NOT a limitation of a value stream cost assignment?
75. What is the usual formula for calculating product costs for value streams with multiple products?
76. In the calculation of product costs for value streams with multiple products, units shipped instead of units
produced is used as the denominator because
77. In calculating product costs for a value stream with multiple products, average product costs are a good
estimate of individual product costs if
78. Figure 15 – 3
Based on the following information:
Materials
Wages
Machining
Other
Total cost
Order Processing
$ 28,000
28,000
Purchasing
43,000
43,000
Cutting
$ 160,000
36,000
$ 33,000
$ 8,000
237,000
Forming
57,500
49,000
22,000
12,000
140,500
Finishing
42,500
28,000
5,000
75,500
Testing
30,000
30,000
Packaging and
Shipping
10,000
10,000
Invoicing
6,000
6,000
Totals
$260,000
$230,000
$60,000
$20,000
$570,000
Part A
2,005
units
Part Q
4,100
units
Total
6,105
units
Refer to Figure 15-3. What is the product cost based on total average cost? (Round to nearest cent.)
79. Figure 15 – 3
Based on the following information:
Materials
Wages
Machining
Other
Total cost
Order Processing
$ 28,000
28,000
Purchasing
43,000
43,000
Cutting
$ 160,000
36,000
$ 33,000
$ 8,000
237,000
Forming
57,500
49,000
22,000
12,000
140,500
Finishing
42,500
28,000
5,000
75,500
Testing
30,000
30,000
Packaging and
Shipping
10,000
10,000
Invoicing
6,000
6,000
Totals
$260,000
$230,000
$60,000
$20,000
$570,000
Part A
2,005
units
Part Q
4,100
units
Total
6,105
units
Refer to Figure 15-3. What is the product cost based on total average conversion cost? (Round to nearest cent.)
80. The document used by the lean control system that compares operational, capacity, and financial metrics
with prior week performances and with a future desired state is called:
81. In value-stream reporting, the income statement reflects the profit/loss by
82. Using average product cost for a value stream means that individual product costs are not known. This is
adequate mainly because
83. Which of the following statements is true about the box scorecard?
84. On a box scorecard, capacity can be labeled as
85. Which of the following statements is NOT true about the box scorecard?
86. Which of the following is an example of an operational performance measure on a box scorecard?
87. The features and characteristics approach
88. What approach is normally used to calculate product costs when products in a value stream are
heterogeneous?
89. Under features and characteristics costing, conversion costs are normally assigned
90. Figure 15-4
Product A
5 minutes
8 minutes
3 minutes
4 minutes
Product B
2 minutes
10 minutes
3 minutes
2 minutes
Refer to Figure 15-4. Under traditional costing methods, which product would have more overhead costs allocated?
91. Figure 15-4
Product A
5 minutes
8 minutes
3 minutes
4 minutes
Product B
2 minutes
10 minutes
3 minutes
2 minutes
Refer to Figure 15-4. Under the features and characteristics costing method, which product would have more overhead costs allocated?
92. Figure 15-4
Product A
5 minutes
8 minutes
3 minutes
4 minutes
Product B
2 minutes
10 minutes
3 minutes
2 minutes
Refer to Figure 15-4. If the materials costs for both products are $75 per unit produced, and conversion costs are $120 per hour, what is the unit cost
of Product B under the features and approach costing method?
93. Figure 15-4
Product A
5 minutes
8 minutes
3 minutes
4 minutes
Product B
2 minutes
10 minutes
3 minutes
2 minutes
Refer to Figure 15-4. If the materials costs for both products are $75 per unit produced, and conversion costs are $120 per hour, what is the unit cost
of Product A under the features and approach costing method?
94. The point at which technical and allocative efficiency are achieved is called:
95. Productivity is concerned with producing
96. The point at which for any mix of inputs that will produce a given output, no more of any one input is used
than is absolutely necessary is called:
97. The two efficiencies included at the point of achieving total efficiency are:
98. The quantitative assessment of productivity changes is called:
99. The process of producing output efficiently, using the least quantity of inputs possible is(are) called:
100. The ratio that measures productive efficiency for one input is called:
101. The productivity ratio used as a partial operational productivity measure is calculated as follows
102. The measure of input and output used by a financial productivity measure is called:
103. The measure of input and output used by an operational productivity measure is called:
104. The productivity measure(s) in which inputs and outputs are expressed in dollars is(are) called:
105. The productivity measure(s) that are expressed in physical terms is(are) called:
106. The prior period used to set the benchmark for measuring productivity changes is(are) called:
107. Which of the following is an advantage of using partial productivity measures?