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Exam 7: Additional Topics in Product Costing

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Question 1

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Which of the following statements describes just-in-time (JIT) inventory management?

A) JIT is an effective approach for shifting inventory costs to vendors.
B) JIT is a comprehensive management philosophy that stresses attitudes that lead to minimum level inventories.
C) JIT is a customer service driven strategy that seeks to strategically produce some excess inventory to guarantee inventories are always available to customers in a timely manner.
D) JIT is only used when a company's vendors ship goods when they are ordered.

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Question 2

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An element of just-in-time processing is:

A) Dependable suppliers who are willing to deliver on short notice.
B) A multi-skilled workforce
C) A total quality control system.
D) All of these apply.

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Question 3

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The purpose of dual cost allocation rates is to provide one set of numbers for managers' internal use and one for external investors.

Alpine Company has two service departments (S1 and S2) and two producing departments (P1 and P2). Department S1 costs are allocated on the basis of number of employees, and Department S2 costs are allocated on the basis of space occupied expressed in square feet. Data on direct department costs, number of employees, and space occupied are as follows: If Alpine uses the direct method, what is the ratio representing the portion of Department S2 allocated to P2?

York Company has two service departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $120,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $18,000 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $18,000 and $30,000, respectively. Data on standard service-hours and number of employees are as follows: Using the direct method, calculate the cost of the Personnel Department allocated to Department X and to Department Y.

Which of the following components of cycle time add value to the product?

Cycle time is comprised of each of the following components except:

Which lean accounting model assigns all manufacturing costs to Cost of Goods Sold and then subtracts inventory costs from the Cost of Goods Sold account?

Which of the following is not a key element of any indirect cost allocation system?

Traditional costing systems often commit the cardinal sin of overproduction in a lean production company if managers are:

The following information pertains to Weiss Corporation: Weiss Corporation does not divide costs into fixed and variable components. Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine-hours. Predetermined overhead rates for Fabrication and Assembly are based on direct labor-hours. If the direct method is used to allocate service department costs, what is the predetermined overhead rate for the Assembly Department (rounded to 2 decimal places)?

Callaway Company uses two producing departments (A and B) and two service departments (S1 and S2) . The costs incurred in S1 and S2 are allocated to Departments A and B and included in their factory overhead rates for costing products. S1 costs are allocated based on the number of employees, S2 costs are allocated based on direct labor hours, and the production departmental overhead rates are also based on direct labor hours. The following data are available for a recent period: Assume S2 Service Department costs are allocated first and the cost allocated to S1 Service Department from S2 is $3,600. What is the cost allocated to each of the two producing departments by Service Department S1?

Ideally, cycle time would consist of only which of the following components?

Cycle time is a perfect measure of value added to a product.

Amber Company uses two producing departments (A and B) and two service departments (S1 and S2) . The costs incurred in S1 and S2 are allocated to Departments A and B and included in their factory overhead rates for costing products. S1 costs are allocated based on the number of employees, S2 costs are allocated based on direct labor-hours, and the production departmental overhead rates are also based on direct labor-hours. The following data are available for a recent period: What is the order of allocation under the step cost allocation method?

York Company has two service departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $120,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $18,000 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $18,000 and $30,000, respectively. Data on standard service hours and number of employees are as follows: Calculate the total overhead costs associated with Departments X and Y after allocating the Maintenance and Personnel Departments using the direct method.

York Company has two service departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $120,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $18,000 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $18,000 and $30,000, respectively. Data on standard service-hours and number of employees are as follows: Using the step method, if Personnel Department costs are allocated first, calculate the cost of Maintenance Department allocation to Department X.

Buckhannon Jewelry Company is in the process of selecting cost drivers that could be used as the bases for allocating various service department costs to its three production divisions: Cutting, Milling and Finishing. Required: Select the most appropriate allocation base for each type of service department cost described in (a) through (j). Select from among the four allocation bases in the following list. In recording your answer, use the abbreviations provided in the list. Some allocation bases will be used for more than one answer. List of Possible Choices of Allocation Bases EMP = Number of Employees UPC = Units of Production Capacity SQF = Square Footage Occupied POH = Budgeted Production Department Overhead Type of Service Department Cost to be Allocated to the Producing Divisions

The following information pertains to Blaze Company: Blaze Company does not divide costs into fixed and variable components. Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine-hours. Predetermined overhead rates for Fabrication and Assembly are based on direct labor-hours (round amounts to dollars) . If the direct method is used to allocate service department costs, the predetermined overhead rate for the Fabrication Department (rounded to 2 decimal places) would be:

The Kanban system developed by the Japanese is also known as: