Question 1 Compute Lead Time Jackson Fabricators Inc machines metal parts for the automotive industry Under the traditional manufacturing approach, the parts are machined through two processes milling and finishing Parts are produced in batch sizes of 70 parts A part requires 3 minutes in milling and 8 minutes in finishing The move time between the two operations for a complete batch is 9 minutes Under the lean philosophy, the part is produced in a cell that includes both the milling and finishing operations The operating time is unchanged however, the batch size is reduced to 5 parts and the move time is eliminated Determine the value added, non value added, and total lead times, and the value added ratio under the traditional and lean manufacturing methods If required, round percentages to one decimal place Traditional Philosophy Lean Manufacturing Philosophy Value added time fill in the blank 1 min fill in the blank 2 min Non value added time fill in the blank 3 min fill in the blank 4 min Total lead time fill in the blank 5 min fill in the blank 6 min Value added ratio (as a percent) fill in the blank 7 fill in the blank 8 Question 2 ProcessActivity Analysis The procurement process for Jarom Wholesale Company includes a series of activities that transforms a materials requisition into a vendor payment The process begins with a request for materials The requesting department prepares and sends a materials request form to the Purchasing Department The Purchasing Department then places a request for a quote to vendors Vendors prepare bids in response to the request for a quote A vendor is selected based on the lowest bid A purchase order to the low bid vendor is prepared The vendor delivers the materials to the company, whereupon a receiving ticket is prepared Payment to the vendor is authorized if the materials request form, receiving ticket, and vendor invoice are in agreement These three documents fail to agree 40 of the time, initiating effort to reconcile the differences Once the three documents agree, a payment is made The process can be diagrammed as follows An activity analysis indicated the following activity costs with this process Preparing materials request $32,000 Requesting, receiving, and selecting vendor bids 92,000 Preparing purchase order 20,000 Preparing receiving ticket 24,000 Matching M R, R T, and invoice 52,000 Correcting reconciliation differences 148,000 Preparing and delivering vendor payment 32,000 Total process activity cost $400,000 On average, the process handles 10,000 individual requests for materials that result in 10,000 individual payments to vendors Management proposes to improve this process in two ways First, the Purchasing Department will develop a preapproved vendor list for which orders can be placed without a request for quote It is expected that this will reduce the cost of requesting and receiving vendor bids by 75 Second, additional training and standardization will be provided to reduce errors introduced into the materials requisition form and receiving tickets It is expected that this will reduce the number of reconciliation differences from 40 to 10 , over an average of 10,000 payments a Develop a table showing the percent of individual activity cost to the total process cost Procurement Activities Activity Cost Percent of Total Process Cost Preparing materials request $fill in the blank a777b2ff7fb9fb6 1 fill in the blank a777b2ff7fb9fb6 2 Requesting, receiving, and selecting vendor bids fill in the blank a777b2ff7fb9fb6 3 fill in the blank a777b2ff7fb9fb6 4 Preparing purchase order fill in the blank a777b2ff7fb9fb6 5 fill in the blank a777b2ff7fb9fb6 6 Preparing receiving ticket fill in the blank a777b2ff7fb9fb6 7 fill in the blank a777b2ff7fb9fb6 8 Matching M R, R T, and invoice fill in the blank a777b2ff7fb9fb6 9 fill in the blank a777b2ff7fb9fb6 10 Correcting reconciliation differences fill in the blank a777b2ff7fb9fb6 11 fill in the blank a777b2ff7fb9fb6 12 Preparing and delivering vendor payment fill in the blank a777b2ff7fb9fb6 13 fill in the blank a777b2ff7fb9fb6 14 Total process activity cost $fill in the blank a777b2ff7fb9fb6 15 fill in the blank a777b2ff7fb9fb6 16 b Determine the average total process cost per vendor payment, assuming 10,000 payments $fill in the blank 118a30fc4ff8013 1 per vendor payment c A table showing the improvements in the activity costs as a result of the changes proposed by management If an amount is zero, enter a 0 Procurement Activities Activity Cost Prior to Improvement Activity Cost After Improvement Activity Cost Savings Preparing materials request $fill in the blank acf41af41fae042 1 $fill in the blank acf41af41fae042 2 $fill in the blank acf41af41fae042 3 Requesting, receiving, and selecting vendor bids fill in the blank acf41af41fae042 4 fill in the blank acf41af41fae042 5 fill in the blank acf41af41fae042 6 Preparing purchase order fill in the blank acf41af41fae042 7 fill in the blank acf41af41fae042 8 fill in the blank acf41af41fae042 9 Preparing receiving ticket fill in the blank acf41af41fae042 10 fill in the blank acf41af41fae042 11 fill in the blank acf41af41fae042 12 Matching M R, R T, and invoice fill in the blank acf41af41fae042 13 fill in the blank acf41af41fae042 14 fill in the blank acf41af41fae042 15 Correcting reconciliation differences fill in the blank acf41af41fae042 16 fill in the blank acf41af41fae042 17 fill in the blank acf41af41fae042 18 Preparing and delivering vendor payment fill in the blank acf41af41fae042 19 fill in the blank acf41af41fae042 20 fill in the blank acf41af41fae042 21 Total process activity cost $fill in the blank acf41af41fae042 22 $fill in the blank acf41af41fae042 23 $fill in the blank acf41af41fae042 24 d Estimate the average cost per vendor payment, assuming that the changes proposed by management are enacted for 10,000 total payments $fill in the blank 5d90df06d005f9b 1 per vendor payment Question 3 Lean Accounting Westgate Inc uses a lean manufacturing strategy to manufacture DVR (digital video recorder) players The company manufactures DVR players through a single product cell The budgeted conversion cost for the year is $918,000 for 2,040 production hours Each unit requires 12 minutes of cell process time During March, 940 DVR players were manufactured in the cell The materials cost per unit is $64 The following summary transactions took place during March Materials were purchased for March production Conversion costs were applied to production 940 DVR players were assembled and placed in finished goods 890 DVR players were sold for $273 per unit a Determine the budgeted cell conversion cost per hour If required, round to the nearest dollar $fill in the blank 1074d80e0ffe058 1 per hour b Determine the budgeted cell conversion cost per unit If required, round to the nearest dollar $fill in the blank 1074d80e0ffe058 2 per unit c Journalize the summary transactions (1) (4) for March If an amount box does not require an entry, leave it blank 1 Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select 2 Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select 3 Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select 4 Sale Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales Select Select Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales Select Select 4 Cost Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales Select Select Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales Select Select Question 4 Cost of Quality Report Meagher Solutions Inc manufactures memory chips for personal computers An activity analysis was conducted, and the following activity costs were identified with the manufacture and sale of memory chips a Identify the cost of quality classification for each activity Quality Activities Activity Cost Quality Cost Classification Correct shipment errors $150,000 AppraisalExternal failureInternal failurePrevention Disposing of scrap 95,000 AppraisalExternal failureInternal failurePrevention Emergency equipment maintenance 125,000 AppraisalExternal failureInternal failurePrevention Employee training 50,000 AppraisalExternal failureInternal failurePrevention Final inspection 80,000 AppraisalExternal failureInternal failurePrevention Inspecting incoming materials 60,000 AppraisalExternal failureInternal failurePrevention Preventive equipment maintenance 40,000 AppraisalExternal failureInternal failurePrevention Processing customer returns 90,000 AppraisalExternal failureInternal failurePrevention Scrap reporting 45,000 AppraisalExternal failureInternal failurePrevention Supplier development 15,000 AppraisalExternal failureInternal failurePrevention Warranty claims 250,000 AppraisalExternal failureInternal failurePrevention Total $1,000,000 b A cost of quality report Assume that the sales for the period were $4,000,000 If required, round percents to one decimal place Quality Cost Classification Quality Cost Percent of Total Quality Cost Percent of Total Sales Prevention $fill in the blank 30edeaf6cf88050 1 fill in the blank 30edeaf6cf88050 2 fill in the blank 30edeaf6cf88050 3 Appraisal fill in the blank 30edeaf6cf88050 4 fill in the blank 30edeaf6cf88050 5 fill in the blank 30edeaf6cf88050 6 Internal failure fill in the blank 30edeaf6cf88050 7 fill in the blank 30edeaf6cf88050 8 fill in the blank 30edeaf6cf88050 9 External failure fill in the blank 30edeaf6cf88050 10 fill in the blank 30edeaf6cf88050 11 fill in the blank 30edeaf6cf88050 12 Total $fill in the blank 30edeaf6cf88050 13 fill in the blank 30edeaf6cf88050 14 fill in the blank 30edeaf6cf88050 15 c The category with the fewest number of quality activities is internal failuresexternal failuresprevention costsappraisal costs Nearly fifty percent of the quality activity costs are internal failuresexternal failuresprevention costsappraisal costs The highest single cost is warranty claims, which is a(n) internal failureexternal failureprevention costappraisal cost Disposing of scrap, emergency equipment maintenance, and scrap reporting are all internal failuresexternal failuresprevention costsappraisal costs Question 5 Lean Accounting Com Tel Inc manufactures and assembles two models of smartphonesthe Tiger Model and the Lion Model The process consists of a lean cell for each product The data that follow concern only the Lion Model lean cell For the year, Com Tel Inc budgeted these costs for the Lion Model production cell Conversion Cost Categories Budget Labor $177,400 Supplies 67,200 Utilities 24,200 Total $268,800 Com Tel plans 2,800 hours of production for the Lion Model cell for the year The materials cost is $82 per unit Each assembly requires 20 minutes of cell assembly time There was no May 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory The following summary events took place in the Lion Model cell during May Electronic parts were purchased to produce 9,500 Lion Model assemblies in May Conversion costs were applied for 9,050 units of production in May 8,870 units were completed and transferred to finished goods in May 8,600 units were shipped to customers at a price of $384 per unit If required, round answers to the nearest cent Required 1 Determine the budgeted cell conversion cost per hour $fill in the blank 8f2f7e036f92017 1 per hour 2 Determine the budgeted cell conversion cost per unit $fill in the blank 8f2f7e036f92017 2 per unit 3 Journalize the summary transactions (a) through (d) If an amount box does not require an entry, leave it blank a Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select b Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select 3 Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory Select Select 4 Sale Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales Select Select Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales Select Select 4 Cost Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales Select Select Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales Select Select 4 Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory Raw and In Process Inventory $fill in the blank 40ff2703bf87020 1 Finished Goods Inventory $fill in the blank 40ff2703bf87020 2 5 Lean accounting is different from traditional accounting because it is more complexsimplified and uses maximumminimal control As a result, the number of transactions are increasedreduced In many lean operations, purchased materials are charged to a raw and in process inventory account materials and indirect labor account Direct labor is included as a conversion cost of the celldisregarded in the cost allocation process Often, nonfinancial performance measures, such as lead time or quality measures over and under production rates , are used to monitor performance Question 6 Lean Principles J Burns Motorcycle Company manufactures a variety of motorcycles J Burns's purchasing policy requires that the purchasing agents place each quarter's purchasing requirements out for bid This is because the Purchasing Department is evaluated solely by its ability to get the lowest purchase prices The lowest cost bidder receives the order for the next quarter (90 days) To make its motorcycles, J Burns requires 3,600 frames per quarter J Burns received two frame bids for the third quarter, as follows Midnight Frames, Inc $401 per frame Delivery schedule 40 frames per working day (90 days in the quarter) Iron Fist Frames Inc $400 per frame Delivery schedule 3,600 (40 frames 90 days) frames at the beginning of July to last for three months J Burns accepted Iron Fist Frames Inc 's bid because it was the low cost bid Required 1 All of the following are ways in which J Burns's could develop long term partnerships with its suppliers except share research and development efforts ignore internal costs caused by delivery delays while contracting on the best price point basis share production schedules establish electronic data interchange establish supplier raw materials logistical support abcde 2 All of the following statements are true regarding the hidden costs beyond price, of Iron Fist Frames Inc 's bid except They are easy to determine, yet often overlooked The hidden costs include the additional internal costs of the higher inventory imposed by Iron Fist Frames Inc 's delivery schedule The hidden costs are incurred by other parts of the organization, not purchasing The hidden costs include costs for additional space and handling The hidden costs include costs of obsolescence and financing abcde 3 Considering only inventory financing costs, what is the additional cost per frame of Iron Fist Frames Inc 's bid if the annual cost of money is 8 ( Hint Determine the average value of frame inventory held for the quarter and multiply by the quarterly interest charge, then divide by the number of frames ) $fill in the blank 3 per frame Question 7 Lead Time Master Chef Appliance Company manufactures home kitchen appliances The manufacturing process includes stamping, final assembly, testing, and shipping In the stamping operation, a number of individuals are responsible for stamping the steel outer surface of the appliance The stamping operation is set up prior to each run A run of 40 stampings is completed after each setup A setup requires 60 minutes The parts wait for the setup to be completed before stamping begins Each stamping requires 5 minutes of operating time After each batch is completed, the operator moves the stamped covers to the final assembly area This move takes 10 minutes to complete The final assembly for each appliance unit requires 22 minutes and is also done in batches of 40 appliance units The batch of 40 appliance units is moved into the test building, which is across the street The move takes 25 minutes In the final test, the 40 unit batch is tested one at a time Each test requires 8 minutes The completed units are sent to shipping for packaging and final shipment to customers A complete batch of 40 units is sent from testing to shipping The Shipping Department is located next to testing Thus, there is no move time between these two operations Packaging and shipment labeling requires 15 minutes per unit Required 1 Determine the amount of value added and non value added lead time and the value added ratio in this process for an average kitchen appliance in a batch of 40 units Round percentages to one decimal place Categorize the non value added time into wait and move time Value added lead time fill in the blank 1 min Non value added lead time Wait time lead time fill in the blank 2 min Move time lead time fill in the blank 3 min Total non value added lead time fill in the blank 4 min Total lead time fill in the blank 5 min Value added ratio (as a percent) fill in the blank 6 2 The company could improve the process by changing the layout from a machine process to a manual process a process orientation to a product orientation a product orientation to a process orientation a value added process to a non value added process None of these answers are correct

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Question 1 Compute Lead Time Jackson Fabricators Inc. machines metal parts for the automotive industry. Under the traditional manufacturing approach, the parts are machined through

Question 1

Compute Lead Time

Jackson Fabricators Inc. machines metal parts for the automotive industry. Under the traditional manufacturing approach, the parts are machined through two processes: milling and finishing. Parts are produced in batch sizes of 70 parts. A part requires 3 minutes in milling and 8 minutes in finishing. The move time between the two operations for a complete batch is 9 minutes.

Under the lean philosophy, the part is produced in a cell that includes both the milling and finishing operations. The operating time is unchanged; however, the batch size is reduced to 5 parts and the move time is eliminated.

Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the traditional and lean manufacturing methods. If required, round percentages to one decimal place.

	Traditional Philosophy	Lean Manufacturing Philosophy
Value-added time	fill in the blank 1	min	fill in the blank 2	min
Non-value-added time	fill in the blank 3	min	fill in the blank 4	min
Total lead time	fill in the blank 5	min	fill in the blank 6	min
Value-added ratio (as a percent)	fill in the blank 7	%	fill in the blank 8	%

Question 2

ProcessActivity Analysis

The procurement process for Jarom Wholesale Company includes a series of activities that transforms a materials requisition into a vendor payment. The process begins with a request for materials. The requesting department prepares and sends a materials request form to the Purchasing Department. The Purchasing Department then places a request for a quote to vendors. Vendors prepare bids in response to the request for a quote. A vendor is selected based on the lowest bid. A purchase order to the low-bid vendor is prepared. The vendor delivers the materials to the company, whereupon a receiving ticket is prepared. Payment to the vendor is authorized if the materials request form, receiving ticket, and vendor invoice are in agreement. These three documents fail to agree 40% of the time, initiating effort to reconcile the differences. Once the three documents agree, a payment is made. The process can be diagrammed as follows:

An activity analysis indicated the following activity costs with this process:

Preparing materials request	$32,000
Requesting, receiving, and selecting vendor bids	92,000
Preparing purchase order	20,000
Preparing receiving ticket	24,000
Matching M/R, R/T, and invoice	52,000
Correcting reconciliation differences	148,000
Preparing and delivering vendor payment	32,000
Total process activity cost	$400,000

On average, the process handles 10,000 individual requests for materials that result in 10,000 individual payments to vendors.

Management proposes to improve this process in two ways. First, the Purchasing Department will develop a preapproved vendor list for which orders can be placed without a request for quote. It is expected that this will reduce the cost of requesting and receiving vendor bids by 75%. Second, additional training and standardization will be provided to reduce errors introduced into the materials requisition form and receiving tickets. It is expected that this will reduce the number of reconciliation differences from 40% to 10%, over an average of 10,000 payments.

a. Develop a table showing the percent of individual activity cost to the total process cost.

Procurement Activities	Activity Cost	Percent of Total Process Cost
Preparing materials request	$fill in the blank a777b2ff7fb9fb6_1	fill in the blank a777b2ff7fb9fb6_2%
Requesting, receiving, and selecting vendor bids	fill in the blank a777b2ff7fb9fb6_3	fill in the blank a777b2ff7fb9fb6_4%
Preparing purchase order	fill in the blank a777b2ff7fb9fb6_5	fill in the blank a777b2ff7fb9fb6_6%
Preparing receiving ticket	fill in the blank a777b2ff7fb9fb6_7	fill in the blank a777b2ff7fb9fb6_8%
Matching M/R, R/T, and invoice	fill in the blank a777b2ff7fb9fb6_9	fill in the blank a777b2ff7fb9fb6_10%
Correcting reconciliation differences	fill in the blank a777b2ff7fb9fb6_11	fill in the blank a777b2ff7fb9fb6_12%
Preparing and delivering vendor payment	fill in the blank a777b2ff7fb9fb6_13	fill in the blank a777b2ff7fb9fb6_14%
Total process activity cost	$fill in the blank a777b2ff7fb9fb6_15	fill in the blank a777b2ff7fb9fb6_16%

b. Determine the average total process cost per vendor payment, assuming 10,000 payments. $fill in the blank 118a30fc4ff8013_1 per vendor payment

c. A table showing the improvements in the activity costs as a result of the changes proposed by management. If an amount is zero, enter a "0".

Procurement Activities	Activity Cost Prior to Improvement	Activity Cost After Improvement	Activity Cost Savings
Preparing materials request	$fill in the blank acf41af41fae042_1	$fill in the blank acf41af41fae042_2	$fill in the blank acf41af41fae042_3
Requesting, receiving, and selecting vendor bids	fill in the blank acf41af41fae042_4	fill in the blank acf41af41fae042_5	fill in the blank acf41af41fae042_6
Preparing purchase order	fill in the blank acf41af41fae042_7	fill in the blank acf41af41fae042_8	fill in the blank acf41af41fae042_9
Preparing receiving ticket	fill in the blank acf41af41fae042_10	fill in the blank acf41af41fae042_11	fill in the blank acf41af41fae042_12
Matching M/R, R/T, and invoice	fill in the blank acf41af41fae042_13	fill in the blank acf41af41fae042_14	fill in the blank acf41af41fae042_15
Correcting reconciliation differences	fill in the blank acf41af41fae042_16	fill in the blank acf41af41fae042_17	fill in the blank acf41af41fae042_18
Preparing and delivering vendor payment	fill in the blank acf41af41fae042_19	fill in the blank acf41af41fae042_20	fill in the blank acf41af41fae042_21
Total process activity cost	$fill in the blank acf41af41fae042_22	$fill in the blank acf41af41fae042_23	$fill in the blank acf41af41fae042_24

d. Estimate the average cost per vendor payment, assuming that the changes proposed by management are enacted for 10,000 total payments.

$fill in the blank 5d90df06d005f9b_1 per vendor payment

Question 3

Lean Accounting

Westgate Inc. uses a lean manufacturing strategy to manufacture DVR (digital video recorder) players. The company manufactures DVR players through a single product cell. The budgeted conversion cost for the year is $918,000 for 2,040 production hours. Each unit requires 12 minutes of cell process time. During March, 940 DVR players were manufactured in the cell. The materials cost per unit is $64. The following summary transactions took place during March:

Materials were purchased for March production.
Conversion costs were applied to production.
940 DVR players were assembled and placed in finished goods.
890 DVR players were sold for $273 per unit.

a. Determine the budgeted cell conversion cost per hour. If required, round to the nearest dollar. $fill in the blank 1074d80e0ffe058_1 per hour

b. Determine the budgeted cell conversion cost per unit. If required, round to the nearest dollar. $fill in the blank 1074d80e0ffe058_2 per unit

c. Journalize the summary transactions (1)-(4) for March. If an amount box does not require an entry, leave it blank.

1.	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
2.	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
3.	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
4. Sale	Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales	- Select -	- Select -
	Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales	- Select -	- Select -
4. Cost	Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales	- Select -	- Select -
	Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales	- Select -	- Select -

Question 4

Cost of Quality Report

Meagher Solutions Inc. manufactures memory chips for personal computers. An activity analysis was conducted, and the following activity costs were identified with the manufacture and sale of memory chips:

a. Identify the cost of quality classification for each activity.

Quality Activities	Activity Cost		Quality Cost Classification
Correct shipment errors		$150,000		AppraisalExternal failureInternal failurePrevention
Disposing of scrap	95,000	AppraisalExternal failureInternal failurePrevention
Emergency equipment maintenance	125,000	AppraisalExternal failureInternal failurePrevention
Employee training	50,000	AppraisalExternal failureInternal failurePrevention
Final inspection	80,000	AppraisalExternal failureInternal failurePrevention
Inspecting incoming materials	60,000	AppraisalExternal failureInternal failurePrevention
Preventive equipment maintenance	40,000	AppraisalExternal failureInternal failurePrevention
Processing customer returns	90,000	AppraisalExternal failureInternal failurePrevention
Scrap reporting	45,000	AppraisalExternal failureInternal failurePrevention
Supplier development	15,000	AppraisalExternal failureInternal failurePrevention
Warranty claims	250,000	AppraisalExternal failureInternal failurePrevention
Total	$1,000,000

b. A cost of quality report. Assume that the sales for the period were $4,000,000. If required, round percents to one decimal place.

Quality Cost Classification	Quality Cost	Percent of Total Quality Cost	Percent of Total Sales
Prevention	$fill in the blank 30edeaf6cf88050_1	fill in the blank 30edeaf6cf88050_2%	fill in the blank 30edeaf6cf88050_3%
Appraisal	fill in the blank 30edeaf6cf88050_4	fill in the blank 30edeaf6cf88050_5%	fill in the blank 30edeaf6cf88050_6%
Internal failure	fill in the blank 30edeaf6cf88050_7	fill in the blank 30edeaf6cf88050_8%	fill in the blank 30edeaf6cf88050_9%
External failure	fill in the blank 30edeaf6cf88050_10	fill in the blank 30edeaf6cf88050_11%	fill in the blank 30edeaf6cf88050_12%
Total	$fill in the blank 30edeaf6cf88050_13	fill in the blank 30edeaf6cf88050_14%	fill in the blank 30edeaf6cf88050_15%

c. The category with the fewest number of quality activities is

internal failuresexternal failuresprevention costsappraisal costs

. Nearly fifty percent of the quality activity costs are

internal failuresexternal failuresprevention costsappraisal costs

. The highest single cost is warranty claims, which is a(n)

internal failureexternal failureprevention costappraisal cost

. Disposing of scrap, emergency equipment maintenance, and scrap reporting are all

internal failuresexternal failuresprevention costsappraisal costs

Question 5

Lean Accounting

Com-Tel Inc. manufactures and assembles two models of smartphonesthe Tiger Model and the Lion Model. The process consists of a lean cell for each product. The data that follow concern only the Lion Model lean cell.

For the year, Com-Tel Inc. budgeted these costs for the Lion Model production cell:

Conversion Cost Categories	Budget
Labor	$177,400
Supplies	67,200
Utilities	24,200
Total		$268,800

Com-Tel plans 2,800 hours of production for the Lion Model cell for the year. The materials cost is $82 per unit. Each assembly requires 20 minutes of cell assembly time. There was no May 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory.

The following summary events took place in the Lion Model cell during May:

Electronic parts were purchased to produce 9,500 Lion Model assemblies in May.
Conversion costs were applied for 9,050 units of production in May.
8,870 units were completed and transferred to finished goods in May.
8,600 units were shipped to customers at a price of $384 per unit.

If required, round answers to the nearest cent.

Required:

1. Determine the budgeted cell conversion cost per hour. $fill in the blank 8f2f7e036f92017_1 per hour

2. Determine the budgeted cell conversion cost per unit. $fill in the blank 8f2f7e036f92017_2 per unit

3. Journalize the summary transactions (a) through (d). If an amount box does not require an entry, leave it blank.

a.	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
b.	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
3.	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
	Accounts PayableConversion CostsCost of Goods SoldFinished Goods InventoryRaw and In Process Inventory	- Select -	- Select -
4. Sale	Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales	- Select -	- Select -
	Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales	- Select -	- Select -
4. Cost	Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales	- Select -	- Select -
	Accounts ReceivableConversion CostsCost of Goods SoldFinished Goods InventorySales	- Select -	- Select -

4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory.

Raw and In Process Inventory	$fill in the blank 40ff2703bf87020_1
Finished Goods Inventory	$fill in the blank 40ff2703bf87020_2

5. Lean accounting is different from traditional accounting because it is more

complexsimplified

and uses

maximumminimal

control. As a result, the number of transactions are

increasedreduced

. In many lean operations, purchased materials are charged to a

"raw and in process inventory" account"materials and indirect labor" account

. Direct labor is

included as a conversion cost of the celldisregarded in the cost allocation process

. Often, nonfinancial performance measures, such as

lead time or quality measures over and under production rates

, are used to monitor performance.

Question 6

Lean Principles

J. Burns Motorcycle Company manufactures a variety of motorcycles. J. Burns's purchasing policy requires that the purchasing agents place each quarter's purchasing requirements out for bid. This is because the Purchasing Department is evaluated solely by its ability to get the lowest purchase prices. The lowest cost bidder receives the order for the next quarter (90 days). To make its motorcycles, J. Burns requires 3,600 frames per quarter. J. Burns received two frame bids for the third quarter, as follows:

Midnight Frames, Inc.: $401 per frame. Delivery schedule: 40 frames per working day (90 days in the quarter).
Iron Fist Frames Inc.: $400 per frame. Delivery schedule: 3,600 (40 frames 90 days) frames at the beginning of July to last for three months.

J. Burns accepted Iron Fist Frames Inc.'s bid because it was the low-cost bid.

Required:

1. All of the following are ways in which J. Burns's could develop long-term partnerships with its suppliers except:

share research and development efforts.
ignore internal costs caused by delivery delays while contracting on the best price point basis.
share production schedules.
establish electronic data interchange.
establish supplier raw materials logistical support.

abcde

2. All of the following statements are true regarding the hidden costs beyond price, of Iron Fist Frames Inc.'s bid except:

They are easy to determine, yet often overlooked.
The hidden costs include the additional internal costs of the higher inventory imposed by Iron Fist Frames Inc.'s delivery schedule.
The hidden costs are incurred by other parts of the organization, not purchasing.
The hidden costs include costs for additional space and handling.
The hidden costs include costs of obsolescence and financing.

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3. Considering only inventory financing costs, what is the additional cost per frame of Iron Fist Frames Inc.'s bid if the annual cost of money is 8%? (Hint: Determine the average value of frame inventory held for the quarter and multiply by the quarterly interest charge, then divide by the number of frames.) $fill in the blank 3 per frame

Question 7

Lead Time

Master Chef Appliance Company manufactures home kitchen appliances. The manufacturing process includes stamping, final assembly, testing, and shipping. In the stamping operation, a number of individuals are responsible for stamping the steel outer surface of the appliance. The stamping operation is set up prior to each run. A run of 40 stampings is completed after each setup. A setup requires 60 minutes. The parts wait for the setup to be completed before stamping begins. Each stamping requires 5 minutes of operating time. After each batch is completed, the operator moves the stamped covers to the final assembly area. This move takes 10 minutes to complete.

The final assembly for each appliance unit requires 22 minutes and is also done in batches of 40 appliance units. The batch of 40 appliance units is moved into the test building, which is across the street. The move takes 25 minutes. In the final test, the 40-unit batch is tested one at a time. Each test requires 8 minutes. The completed units are sent to shipping for packaging and final shipment to customers. A complete batch of 40 units is sent from testing to shipping. The Shipping Department is located next to testing. Thus, there is no move time between these two operations. Packaging and shipment labeling requires 15 minutes per unit.

Required:

1. Determine the amount of value-added and non-value-added lead time and the value-added ratio in this process for an average kitchen appliance in a batch of 40 units. Round percentages to one decimal place. Categorize the non-value-added time into wait and move time.

Value-added lead time		fill in the blank 1 min.
Non-value-added lead time:
	Wait time lead time	fill in the blank 2 min.
	Move time lead time	fill in the blank 3 min.
Total non-value-added lead time		fill in the blank 4 min.
Total lead time		fill in the blank 5 min.
Value-added ratio (as a percent)		fill in the blank 6%

2. The company could improve the process by changing the layout from:

a machine process to a manual process.a process orientation to a product orientation.a product orientation to a process orientation.a value-added process to a non-value-added process.None of these answers are correct.