Question 1

Lean accounting may involve cutting:

Accepted Answer

Lean accounting is focused on reducing waste within the accounting process. This could involve cutting inventory levels, the workload of accounting tasks, and paperwork. Therefore, all of the choices (A, B, and C) may be necessary in pursuing a lean accounting approach.

Question 2

Just-in-time manufacturing is dedicated to:

Accepted Answer

Just-in-time manufacturing is a strategy where the company orders raw materials and supplies as they are needed in the production process, rather than keeping excess inventory on hand. This helps to minimize waste and reduce the cost of carrying excess inventory. Therefore, having the right amount of materials at the time they are needed is the core principle of just-in-time manufacturing, making option B the best choice.

Question 3

Which of the following terms is typically associated with just-in-time systems?

Accepted Answer

Manufacturing cells are typically associated with just-in-time systems, as they allow for the production of smaller batches of products or components, which is a key aspect of just-in-time manufacturing. A demand-push system is typically associated with traditional manufacturing approaches, while non-value-added activities are activities that do not directly contribute to the creation of value for the customer, and can be eliminated in both traditional and just-in-time systems. Linear regression is a statistical method used to analyze the relationship between variables, and is not directly associated with just-in-time systems.

Question 4

A limitation of the theory of constraints and throughput costing is that:

Accepted Answer

Throughput costing focuses on short-term results and may lead to excessive labor and overhead costs as it emphasizes maximizing throughput without considering these costs.

Question 5

Advantages of just-in time inventory management are all of the following, except:

Accepted Answer

Just-in-time inventory management relies heavily on external suppliers and requires a strong relationship with them. Therefore, it does not make the firm more independent of external suppliers. Instead, it strengthens the partnership between them. The other options are advantages of just-in-time inventory management.

Question 6

Activities performed under a value chain approach to quality management, to insure defect-free production, such as routine equipment maintenance or quality training, represent which category of quality costs?

Accepted Answer

Activities performed under a value chain approach to quality management, such as routine equipment maintenance or quality training, represent prevention costs as they are focused on preventing defects and ensuring defect-free production. Prevention costs are one of the categories of quality costs, along with appraisal costs and internal and external failure costs.

Question 7

Which of these is not associated with the lean accounting philosophy?

Accepted Answer

Lean accounting emphasizes decentralization of decision making and empowering front-line employees. Centralizing the organizational structure would be contradictory to this philosophy. Choices A and B are associated with the lean accounting philosophy. Therefore, the correct answer is C.

Question 8

The statement concerning lean accounting that is true is:

Accepted Answer

Lean accounting emphasizes on eliminating waste in order to improve efficiency and reduce costs. As a result, labor is treated as a period cost, which is relatively more fixed than variable, rather than being allocated as a direct cost to products, which can distort the cost of production. A perpetual inventory system may be used to track inventory in real-time, but it is not a mandatory requirement of lean accounting. The focus of lean accounting is not solely on achieving economies of scale, but rather on improving the entire value stream to create value for customers while eliminating waste. Therefore, options A and B are incorrect.

Question 9

It is correct that under a successful just-in-time production and inventory control system:

Accepted Answer

In a successful just-in-time production and inventory control system, suppliers will normally make frequent deliveries of small lots of materials. While having only one supplier and a reliable supplier are ideal, they are not necessarily requirements for a successful system. Distance from the supplier can be a factor, as longer distances increase the risk of delays and transportation issues. Therefore, choice C is the best answer.

Question 10

In relation to the drum-buffer-rope concept that is used to maxamise flow through an organisational bottleneck, the statement that is correct is:

Accepted Answer

All the statements are correct. The 'drum' is the pace or rate at which the constraint operates, ensuring that non-constraint resources do not overproduce and create excess inventory. The 'buffer' is a time cushion or inventory buffer between the constraint and non-constraint resources, protecting the constraint from disruptions and allowing non-constraint resources to continue working even when the constraint is unavailable. The 'rope' is the mechanism that communicates the demand for materials to suppliers, ensuring that materials arrive on time to meet the constraint's needs. Together, these components help maximize flow through the organizational bottleneck.

Question 11

The first stage in the lean accounting model is:

Accepted Answer

The first stage in the lean accounting model is to identify and define value in organizational offerings, as it sets the foundation for understanding what is valuable to the customer and aligning processes accordingly.

Question 12

A just-in-time system reduces costs in all of these ways, except:

Accepted Answer

Reducing the range of products produced is not a direct benefit of just-in-time systems. While it may indirectly lead to cost savings by focusing on producing only the most profitable products, reducing the range of products may also limit the company's ability to meet customer demand and potentially decrease revenue. Maximising the use of space, reducing defect rates, and enhancing manufacturing flexibility are all direct benefits of just-in-time systems that can reduce costs.

Question 13

Under TOC a constraint that is a demand side rather an a supply side constraint is:

Accepted Answer

All the options listed (A, B, C) are related to supply side constraints, as they pertain to limitations in production capacity, skills, or materials. Demand side constraints would involve limitations related to customer demand or market conditions, which are not represented in the given options.

Question 14

The statement concerning the theory of constraints (TOC) that is not true is:

Accepted Answer

The statement that "the theory is only relevant to a small number of businesses" is not true. The theory of constraints is applicable to a wide range of businesses in various industries, including manufacturing, healthcare, and service sectors.

Question 15

The major disadvantage of the just-in-time system is:

Accepted Answer

The best choice is option C, unforeseen external events disrupting the delivery schedule. This is the major disadvantage of the just-in-time system because it relies heavily on a precise delivery schedule, and any disruptions can cause significant delays and even halt production. The other options, such as the number of small deliveries and inspections, are not necessarily major disadvantages, but rather necessary aspects of the just-in-time system that help ensure quality control and efficient production.

Question 16

A practice associated with lean accounting is:

Accepted Answer

Lean accounting emphasizes the use of cross-functional teams, so producing in teams is a common practice associated with it. Producing to forecast, vertical reporting, and accounting information provided only to managers and supervisors are not specifically associated with lean accounting.

Question 17

In throughput costing the throughput of a product refers to its:

Accepted Answer

Throughput costing focuses solely on the variable costs associated with producing a product. Therefore, the throughput of a product is equal to its selling price minus its totally variable costs.

Question 18

Which of these is not typically associated with successful implementation of just-in-time (JIT) systems?

Accepted Answer

Using as many suppliers as possible would increase complexity and make it difficult to maintain coordination, resulting in a higher risk of non-delivery. JIT systems rely on having clear communication and coordination between a limited number of reliable suppliers.

Question 19

Which of these is not a benefit of the just-in-time system?

Accepted Answer

The just-in-time system does not guarantee that inventory will always be available from the supplier, as it is dependent on the supplier's ability to deliver materials on time. However, JIT does reduce inventory obsolescence and raw material handling costs, as well as improving efficiency and reducing waste.

Question 20

In throughput costing which of the following is untrue?

Accepted Answer

Operating expenses are not considered direct costs in throughput costing. They are considered as indirect costs and are deducted from the throughput to calculate the net profit. Choice A is true as it defines profit in throughput costing. Choice B is also true as it defines the calculation of throughput. Choice C is true as inventory is also referred to as investment in throughput costing.

Quiz 16: Strategic Management Control: a Lean Perspective