Chapter 27—Cost Management for Just-In-Time Environments Key
1. Just-in-Time (JIT) manufacturing focuses on reducing time, cost, and poor quality in processes.
2. The just-in-time (JIT) philosophy views inventory as a necessary buffer to protect against process problems.
3. The just-in-time (JIT) philosophy views inventory as an unnecessary waste of resources.
4. In the just-in-time (JIT) philosophy, unexpected downtime is the result of unreliable processes.
5. Lead time is the process time between start and completion.
6. All lead time are considered as value-added lead time.
7. Lead time includes both value-added time and non-value-added time.
8. Lead time reduction can be a cost-saving goal for any processed item.
9. Reducing wait time is not linked to reducing inventory.
10. Reducing wait time is directly linked to reducing inventory.
11. Just-in-Time (JIT) manufacturing favors organizing work around products rather than around processes.
12. Just-in-Time (JIT) manufacturing favors organizing work around processes rather than around products.
13. Employee involvement in a product-oriented factory emphasizes employee teams, rather than individual
employees.
14. A setup is the time required to prepare an operation for a new production run.
15. Long setups and large batch sizes result in smaller inventories.
16. Within-batch wait time increases total lead time.
17. Large batch sizes increase lead time.
18. Just-in-Time (JIT) manufacturing is also called make-to-stock manufacturing.
19. Just-in-Time (JIT) manufacturing is also called make-to-order manufacturing.
20. A make-to-order company matches its production schedules to actual customer orders.
21. Make-to-order companies produce mainly to stock inventory.
22. Make-to-order companies typically produce in small batch sizes.
23. Maximum effectiveness and efficiency are reached when the just-in-time (JIT) philosophy is used only by
manufacturers.
24. Maximum effectiveness and efficiency are reached when the just–in-time (JIT) philosophy is used by both
manufacturers and their suppliers.
25. A process-oriented layout segments production facilities into functional departments.
26. In a push manufacturing system, raw materials are released to production based on forecasted demand.
27. In a push manufacturing system, raw materials are released to production based on actual customer orders.
28. In a pull manufacturing system, raw materials are released to production based on actual customer orders.
29. In a pull manufacturing system, raw materials are released to production based on forecasted demand.
30. Setups are a significant time-consuming activity in traditional production environments.
31. In a just-in-time (JIT) environment, raw materials are delivered less frequently than in a traditional
environment.
32. In a just-in-time (JIT) environment, raw materials are delivered more frequently than in a traditional
environment.
33. In a just-in-time (JIT) environment, process problems are more visible than they are in a traditional
environment.
34. Under the just-in-time production concept, employees are better utilized if they are experts in one operation
rather than wasting time training them to learn various production operations.
35. 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.
36. In a just-in-time (JIT) environment, process problems are less visible than they are in a traditional
environment.
37. Employee involvement does not include performing any indirect manufacturing functions.
38. Push manufacturing is also referred to as make-to-order processing.
39. Push manufacturing (made-to-stock) is a traditional approach to manufacturing.
40. In a just-in-time (JIT) environment, operations only respond to customer orders.
41. In a just-in-time (JIT) system, the work in process and raw materials inventory accounts are combined.
42. In a just-in-time (JIT) system, there are more transactions to record than there are in a traditional system.
43. In a just-in-time (JIT) system, there are fewer transactions to record than there are in a traditional system.
44. In a just-in-time (JIT) system, direct labor is included in conversion costs.
45. In a just-in-time (JIT) system, indirect labor is traced directly to product cells.
46. A backflush accounting system uses work in process inventories as control points between each process
step.
47. Financial accounting information is used more often for long-term operating decisions and non-financial
information is used more often for day-to-day decisions.
48. Non-financial accounting information is used more often for long-term operating decisions than is financial
information.
49. A non-financial measure is operating information that has not been translated into dollars.
50. In a just-in-time (JIT) environment, the journal entry to record raw materials purchases would include a
credit to the raw materials inventory account.
51. In a just-in-time (JIT) environment, the journal entry to record raw materials purchases would include a
debit to the raw and in process inventory account.
52. In a just-in-time (JIT) environment, the journal entry to record conversion costs would include a debit to the
raw and in process inventory account.
53. In a just-in-time (JIT) environment, the journal entry to record conversion costs would include a debit to the
manufacturing overhead control account.
54. The budgeted cell conversion cost rate is very similar to the predetermined factory rate because both include
only factory overhead costs.
55. A just-in-time non-manufacturing process can be accomplished by consolidating, in one area, all of the
services provided to a customer.
56. Costs of controlling quality include prevention costs and internal failure costs.
57. Prevention costs and appraisal costs are considered costs of controlling quality.
58. Costs of failing to control quality include prevention costs and external failure costs.
59. It is easier to quantify costs of controlling quality than the costs of failing to control quality.
60. By spending more in costs of controlling quality, the costs of failing to control quality will decrease.
61. Which of the following is an example of value-added time?
62. Which of the following results in long lead time?
63. The just-in-time (JIT) philosophy attempts to reduce setup times, which will:
64. What do just-in-time (JIT) manufacturers demand from their vendors?
65. How are the objectives of just-in-time (JIT) manufacturing achieved?
66. Which of the following is (are) objective(s) of just-in-time (JIT) manufacturing?
67. Inventory reduction is a ____ principle.
68. Set up time is disregarded as an improvement priority under the ____ manufacturing concept.
69. ____ manufacturing philosophy emphasizes quality and zero defects.
70. ____ manufacturing deals with several suppliers in hopes of finding the best price.
71. Just-in-time manufacturing philosophy reduces all of the following except
72. Traditional manufacturing emphasizes all of the following except
73. Which of the following is considered non-value-added lead time?
74. Under a JIT environment, employees have the responsibility and authority to
75. Which of the following drives work-in-process inventory levels higher?
76. Which of the following is characteristic of a just-in-time (JIT) production layout?
77. In a just-in-time (JIT) environment, process problems are more visible than they are in a traditional
environment because:
78. Examples of transforming a traditional manufacturing environment to a just–in-time environment is to do all
of the following except
79. Which of the following is characteristic of the just-in–time system?
80. Which of the following is characteristic of the traditional cost system?
81. Which of the following is an example of a non-financial measure?
82. Which of the following is best suited to providing timely and focused performance information?
83. Rabbitt Co. operates in a just-in-time manufacturing environment. For June production, Rabbitt purchased
5,000 units of raw materials at $6.00 per unit on account. The journal entry required to record this transaction
is:
84. Kilbuck Manufacturing operates in a just-in-time manufacturing environment. Kilbuck’s actual conversion
costs for the month of April follow:
Direct and indirect labor
$150,000
Machine depreciation
85,000
Maintenance and supplies
60,000
Total conversion costs
$295,000
The journal entry to record April’s conversion costs will include:
85. Logan Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The
company assembles the motor drives for several accounts. The process consists of a just–in-time cell for each
customer. The following information relates only to one customer’s just-in-time cell. For the year planned labor
and overhead was $76,800,000; materials costs, $25 per unit. Planned production included 9,600 hours to
produce 76,800 motor drives. Actual production for the month of August was 5,200 units, and motor drives
shipped amounted to 5,040 units. From the foregoing information, determine the budgeted cell conversion cost
per hour.
86. Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The
company assembles the motor drives for several accounts. The process consists of a just–in-time cell for each
customer. The following information relates only to one customer’s just-in-time cell for the coming year.
Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000
hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped
amounted to 1,380 units.
From the foregoing information, determine the budgeted cell conversion cost per unit.
87. Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The
company assembles the motor drives for several accounts. The process consists of a just–in-time cell for each
customer. The following information relates only to one customer’s just-in-time cell for the coming year.
Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000
hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped
amounted to 1,380 units.
From the foregoing information, determine the manufacturing cost per unit.
88. Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The
company assembles the motor drives for several accounts. The process consists of a just–in-time cell for each
customer. The following information relates only to one customer’s just-in-time cell for the coming year.
Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000
hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped
amounted to 1,380 units.
From the foregoing information, determine the amount of the conversion costs charged to Raw and In Process
Inventory during August.
89. Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The
company assembles the motor drives for several accounts. The process consists of a just–in-time cell for each
customer. The following information relates only to one customer’s just-in-time cell for the coming year.
Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000
hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped
amounted to 1,380 units.
From the foregoing information, determine the production costs transferred to Finished Goods during August.
90. Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The
company assembles the motor drives for several accounts. The process consists of a just–in-time cell for each
customer. The following information relates only to one customer’s just-in-time cell for the coming year.
Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000
hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped
amounted to 1,380 units.
From the foregoing information, determine the production costs transferred to Cost of Goods Sold during
August.
91. Accounting for just-in–time operations requires fewer transactions because
92. Which of the following results in fewer transactions in just-in-time accounting?