Which of the following nonfinancial performance indicators would be least applicable in a lean accounting system?
A) Days' supply of inventory on hand.
B) On-time delivery rates.
C) Manufacturing process cycle time.
D) Customer-response time (CRT).
E) Percentage of overhead costs absorbed into production.

Question

Quizplus · Accepted Answer

Nonfinancial performance indicators such as days' supply of inventory, on-time delivery rates, manufacturing process cycle time, and customer-response time are all important in a lean accounting system as they focus on the efficiency of operations, delivery speed, and customer satisfaction. However, the percentage of overhead costs absorbed into production is a financial performance indicator and not a nonfinancial one. Thus, it is least applicable in a lean accounting system that seeks to reduce unnecessary costs and focus on efficiency rather than simply absorbing overhead costs into production.

Which of the Following Nonfinancial Performance Indicators Would Be Least