Deck 15: Lean Principles and Accounting

Question 1

Only manufacturers use the lean business model.

Answer 1

False

Question 2

Lean principles include all of the following except:

A) Pull production
B) Large batch sizes
C) Zero waste
D) Value streams
E) Zero defects

Answer 2

B

Question 3

Kang Co. reports work in process inventory of $1,085 and cost of goods sold of $56,575. Days' sales in work in process inventory is:

A) 6 days
B) 5 days
C) 4 days
D) 7 days
E) 8 days

Answer 3

D
Explanation: Days' sales in work in process inventory = Work in process inventory/Cost of goods sold × 365
Days' sales in work in process inventory = ($1,085/$56,575) × 365 = 7 days

Question 4

Vista Company has 25 days' payable outstanding based on the current year's cost of goods sold of $11,315. What is Vista's balance in accounts payable?

A) $775
B) $870
C) $750
D) $675
E) $810

Question 5

If work in process inventory is $900 and cost of goods sold is $16,425, what is days' sales in work in process inventory?

A) 21 days
B) 6 days
C) 5 days
D) 20 days
E) 18 days

Question 6

If accounts payable is $1,116 and cost of goods sold is $11,315, what is days' payable outstanding?

A) 30 days
B) 45 days
C) 36 days
D) 33 days
E) 40 days

Question 7

Challenges of using push production include all of the following except:

A) Increased risk of obsolescence.
B) More defects.
C) Increased storage costs.
D) Production occurs just-in-time.
E) Stock-outs and lost sales.

Question 8

Lean manufacturers generally have more transactions to record and use more accounts than manufacturers using traditional processes.

Question 9

A company reports ending accounts payable of $1,271 and cost of goods sold of $11,315. Compute days' payable outstanding.

A) 30 days
B) 45 days
C) 36 days
D) 33 days
E) 41 days

Question 10

Greun Company has 11 days' sales in work in process inventory based on the current year's cost of goods sold of $11,680. What is Greun's work in process inventory?

A) $352
B) $422
C) $350
D) $465
E) $310

Question 11

Singh Company manufacturers wheelchairs. Each wheelchair requires $325 of raw materials and $780 of conversion costs. Each wheelchair is sold for $1,500. Last month Singh completed 35 wheelchairs and sold 32 wheelchairs. The ending balance in finished goods inventory is:

A) $3,500.
B) $1,105.
C) $3,315.
D) $4,315.
E) $4,420.

Question 12

Beake Company has 15 days' sales in work in process inventory based on the current year's cost of goods sold of $11,315. What is Beake's work in process inventory?

A) $310
B) $470
C) $350
D) $465
E) $510

Question 13

Value streams include all activities needed to create customer value.

Question 14

Vell Inc. uses lean principles to reduce cycle time. Through production improvements the process time was reduced from 4.5 days to 2 days. Inspection time is 0.25 days. Strategic rearrangement of the production area reduced move time to 0.1 days. Wait time was 3 days, but due to improved scheduling and ordering has been reduced by 2.25 days. Total cycle time for Vell after the improvements is:

A) 7.6 days.
B) 2.75 days
C) 5.35 days
D) 2.0 days
E) 3.1 days

Question 15

Alvi reports ending work in process inventory of $341 and cost of goods sold of $11,315. Compute days' sales in work in process inventory.

A) 10 days
B) 11 days
C) 15 days
D) 8 days
E) 17 days

Question 16

Days' payable outstanding measures how long, on average, a company takes to pay its creditors.

Question 17

Work in process inventory reflects a delay in getting products to customers, which is considered wasteful by lean businesses.

Question 18

The triple bottom line focus on the "planet" works to reduce waste by striving for:

A) Closed-loop supply chain.
B) Increased profits.
C) Improved working conditions.
D) Automated processes.
E) Lower inventory levels.

Question 19

Haupt Inc. manufacturers water pumps. Each pump requires $155 of raw materials and $315 of conversion costs. Each pump is sold for $725. Last month Haupt produced and sold 69 pumps. The journal entry to record cost of goods sold would include:

A) Debit to accounts receivable of $32,430.
B) Credit to sales of $32,430.
C) Debit to cost of goods sold of $32,430.
D) Credit to cost of goods sold of $50,025.
E) Debit to sales of $50,025.

Question 20

A company reports ending accounts payable of $1,440 and cost of goods sold of $11,680. Compute days' payable outstanding.

A) 39 days
B) 45 days
C) 36 days
D) 35 days
E) 41 days

Question 21

Haupt Inc. manufacturers water pumps. Each pump requires $155 of raw materials and $315 of conversion costs. Each pump is sold for $725. Last month Haupt produced and sold 69 pumps. The journal entry to apply conversion costs to production would include:

A) Debit to work in process inventory of $21,735.
B) Credit to sales of $21,735.
C) Debit to cost of goods sold of $31,735.
D) Credit to work in process inventory of $21,735.
E) Debit to accounts payable of $31,735.

Question 22

Which of the following is the correct formula for calculating cycle time?

A) Process time + inspection time − move time − wait time.
B) Process time − inspection time + move time + wait time.
C) Process time + inspection time + move time + wait time.
D) Process time − inspection time − move time − wait time.
E) Process time + inspection time + move time − wait time.

Question 23

Which of the following statements is correct concerning the elements of cycle time?

A) Move time is the time spent moving (1) raw materials from storage to production and (2) goods in process from one factory location to another factory location.
B) Inspection time is the time spent producing the product.
C) Process time is considered non-value-added time.
D) Wait time is considered value-added time.
E) Cycle efficiency is the ratio of non-value-added time to total cycle time.

Question 24

Using the information below, compute cycle efficiency: $\begin{array}{lr}\text { Process time } & 6.0 \text { hours } \\\text { Inspections time } & 0.5 \text { hours } \\\text { Move time } & 0.6 \text { hours } \\\text { Wait time } & 0.9 \text { hours } \\\text { Storage time } & 72.0 \text { hours }\end{array}$

A) 93.8%.
B) 81.3%.
C) 100.0%.
D) 75.0%.
E) 88.8%.

Question 25

Singh Company manufacturers wheelchairs. Each wheelchair requires $325 of raw materials and $780 of conversion costs. Each wheelchair is sold for $1,500. Last month Singh started 38 wheelchairs and completed 35 wheelchairs. The beginning balance in work in process inventory is zero. The ending balance in work in process inventory is:

A) $2,340.
B) $1,105.
C) $925.
D) $1,315.
E) $975.

Question 26

Using the information below, compute cycle time: $\begin{array}{lr}\text { Process time } & 6.0 \text { hours } \\\text { Inspections time } & 0.5 \text { hours } \\\text { Move time } & 0.6 \text { hours } \\\text { Wait time } & 0.9 \text { hours } \\\text { Storage time } & 72.0 \text { hours }\end{array}$

A) 7.5 hours.
B) 6.5 hours.
C) 8.0 hours.
D) 80.0 hours.
E) 7.1 hours.

Question 27

Vista Company's has 32 days' payable outstanding based on the current year's cost of goods sold of $11,315. What is Vista's balance in accounts payable?

A) $975
B) $870
C) $950
D) $998
E) $992