Companies that use a just-in-time (JIT production system Quizlet)

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1. Which of the following statements is (are) true about non-value-added activities?

I. Non-value-added activities are often unnecessary and dispensable.

II. Non-value-added activities may be necessary but are being performed in an inefficient and improvable manner.

III. Non-value-added activities can be eliminated without deterioration of product quality, performance, or perceived value.

A. I only

B. II only.

C. III only.

D. I and II.

E. I, II, and III.

E. I, II, and III.

2. During a recent accounting period, Marty's shipping department processed 26 orders. Each order typically takes four hours to complete; however, the average time increased to five hours because of various departmental inefficiencies. If shipping labor is paid $14 per hour, the company's non-value-added cost would be:

A. $0.

B. $56.

C. $364.

D. $1,456.

E. $1,820.

C. $364.

3. Stanley Corporation takes eight hours to complete the setup process for a certain electrical component, with the setup cost averaging $150 per hour. If the company's competitor can accomplish the same process in six hours, Stanley's non-value-added cost would be:

A. $0.

B. $150.

C. $300.

D. $900.

E. $1,200.

C. $300.

4. Factory Oak produces various wooden bookcases, tables, storage units, and chairs. Which of the following would be included in a listing of the company's non-value-added activities?

A. Assembly of tables.

B. Staining of storage units.

C. Transfer of chairs from the assembly line to the staining facility.

D. Storage of completed bookcases in inventory.

E. Both "C" and "D."

E. Both "C" and "D."

5. Airstream builds recreational motor homes. All of the following activities add value to the finished product except:

A. installation of carpet.

B. assembly of the frame to the chassis.

C. storage of the vehicle in the sales area.

D. addition of exterior lights.

E. final painting and polishing.

C. storage of the vehicle in the sales area.

6. In an attempt to cut non-value-added costs, companies may:

A. reduce the scope of selected activities.

B. eliminate selected activities.

C. combine selected activities.

D. do "A" and "B" above.

E. do "A," "B," and "C" above.

E. do "A," "B," and "C" above.

7. Customer profitability analysis is tied closely to:

A. just-in-time systems.

B. activity-based costing.

C. job costing.

D. process costing.

E. operation costing.

B. activity-based costing.

8. Generally speaking, companies prefer doing business with customers who:

A. order small quantities rather than large quantities.

B. often change their orders.

C. require special packaging or handling.

D. request normal delivery times.

E. need specialized engineering design changes.

D. request normal delivery times.

9. Which of the following can have a negative impact on a sale's profitability?

A. Number of required sales contacts (phone calls, visits, etc.).

B. Special shipping instructions.

C. Accounts receivable collection time.

D. Purchase-order changes.

E. All of the above.

E. All of the above.

10. Horton Corporation's customers differ greatly with respect to number of required sales contacts (e.g., phone calls and sales visits), account payment patterns, and design/engineering change orders. Which of the following choices likely denotes an ideal customer from Horton's perspective?

Required Sales Contacts Account Payment Patterns Design/Engineering Change Orders

A. Many Slow Many

B. Many Rapid Many

C. Few Slow Many

D. Few Rapid Few

E. Many Rapid Few

D. Few Rapid Few

11. Which of the following is an appropriate way to analyze customer profitability?

A. The cost of servicing a customer computed as a percentage of the customer's gross margin.

B. The cost of servicing a customer computed as a percentage of the customer's gross margin, compared against company or industry norms.

C. The cost of servicing a customer computed as a percentage of the customer's gross margin, examined over several years.

D. Choices "A" and "B."

E. Choices "A," "B," and "C."

E. Choices "A," "B," and "C."

12. The costing technique that produces a stipulated profit when a product is sold at its estimated market-driven price is termed:

A. kaizen costing.

B. product costing.

C. target costing.

D. full costing.

E. strategic costing.

C. target costing.

13. The four tasks that follow take place in the concept known as target costing:

1—Value engineering.

2—Establish a target selling price.

3—Establish a target cost.

4—Establish a target profit.

Which of the following choices correctly depicts the sequence of these tasks?

A. 1, 3, 4, 2.

B. 3, 1, 4, 2.

C. 2, 4, 3, 1.

D. 2, 3, 1, 4.

E. Some other sequence not listed above.

C. 2, 4, 3, 1.

14. Of the five tasks that follow, which one is typically performed second when using the concept known as target costing?

A. Compute a target cost.

B. Determine a target selling price.

C. Calculate a target profit.

D. Select a cost driver.

E. Undertake value engineering.

C. Calculate a target profit.

15. Robertson, Inc., uses target costing and sells a product for $36 per unit. The company seeks a profit margin equal to 25% of sales. If the current manufacturing cost is $29 per unit, the firm will need to implement a cost reduction of:

A. $0.

B. $2.

C. $9.

D. $20.

E. $27.

B. $2.

16. Collins Corporation uses target costing and sells a product for $50 per unit. The company seeks a profit margin equal to 40% of sales. If target-costing calculations revealed a need for a $5 cost reduction, the firm's current manufacturing cost must be:

A. $20.

B. $25.

C. $30.

D. $35.

E. some other amount.

D. $35.

17. The process of continual cost reduction during the manufacturing phase of an existing product is termed:

A. kaizen costing.

B. product costing.

C. target costing.

D. market costing.

E. strategic costing.

A. kaizen costing.

18. Kaizen costing refers to:

A. radical cost reductions during the design phase of a product.

B. radical cost reductions during the manufacturing phase of a product.

C. small, continual cost reductions during the design phase of a product.

D. small, continual cost reductions during the manufacturing phase of a product.

E. the use of operational costing in out-of-control manufacturing situations.

D. small, continual cost reductions during the manufacturing phase of a product.

19. Which of the following would least likely be a feature or goal that is associated with a kaizen-costing program?

A. Elimination of waste.

B. Use of overhead application rates.

C. Implementation of employee suggestions.

D. Improvements in production time.

E. Reduction of non-value-added activities and costs.

B. Use of overhead application rates.

20. The comparison of a company's practices and performance levels against those of other organizations is most commonly known as:

A. benchmarking.

B. continuous improvement.

C. re-engineering.

D. comparative analysis.

E. kaizen business analysis (KBA).

A. benchmarking.

21. Which of the following techniques does not logically belong with the others?

A. Product costing.

B. Value engineering.

C. Kaizen costing

D. Continuous improvement.

E. Benchmarking.

A. Product costing.

22. Which of the following statements about re-engineering is (are) true?

I. Re-engineering is the complete redesign of a process in an attempt to find creative new ways to accomplish an objective.

II. Re-engineering involves more of a "giant leap" than the concept of kaizen.

III. Re-engineering may entail high risks.

A. I only.

B. I and II.

C. I and III.

D. II and III.

E. I, II, and III.

E. I, II, and III.

23. The contemporary management tool that focuses on restrictions that limit a company's ability to maximize long-run profit is commonly known as:

A. simulation.

B. linear regression.

C. constraint manipulation.

D. the theory of constraints.

E. game theory.

D. the theory of constraints.

24. A company that adopts a just-in-time production system would attempt to reduce and/or eliminate:

A. raw-material inventory.

B. raw-material inventory and work-in-process inventory.

C. raw-material inventory, work-in-process inventory, and finished-goods inventory.

D. work-in-process inventory.

E. finished-goods inventory.

C. raw-material inventory, work-in-process inventory, and finished-goods inventory.

25. Which of the following inventories would a company try to reduce and/or eliminate under a just-in-time system?

Raw-Material Inventory Work-in-Process Inventory Finished-Goods Inventory

A. No No Yes

B. No Yes No

C. Yes No No

D. Yes No Yes

E. Yes Yes Yes

E. Yes Yes Yes

26. Marion Corporation, which produces unique office furniture, recently installed a just-in-time production system. The various steps in the company's manufacturing process are coordinated by using a philosophy known as:

A. supply pull.

B. demand pull.

C. supply push.

D. demand push.

E. none of the above.

B. demand pull.

27. Which of the following statements regarding the pull method is (are) true?

I. Goods are produced in each manufacturing stage only as they are needed at the next stage.

II. The pull method greatly reduces work-in-process inventory.

III. The pull method reduces waiting time and the associated non-value-added cost.

A. II only.

B. I and II.

C. I and III.

D. II and III.

E. I, II, and III.

E. I, II, and III.

28. In the pull method of coordinating a production process:

A. departments early in the production process continually make components in order to ensure that later departments do not run out.

B. nothing is manufactured at a work center until a need is signaled from a subsequent process.

C. work-in-process inventories are increased throughout the plant.

D. production employees never have idle time, resulting in increased efficiency.

E. defective products are "pulled" off the line and sent to a special department for rework.

B. nothing is manufactured at a work center until a need is signaled from a subsequent process.

29. A Kanban:

A. is used in conjunction with activity-based costing.

B. facilitates quick and inexpensive setups of machines.

C. helps train workers to do a variety of assignments.

D. initiates production in a particular work center.

E. measures the correlation between a cost driver and a cost pool.

D. initiates production in a particular work center.

30. Which of the following is not a key feature of a JIT system?

A. Purchases of materials in relatively large amounts (i.e., lot sizes).

B. A smooth, uniform production rate.

C. Total quality control.

D. Multiskilled workers and flexible production facilities.

E. A pull approach to coordinating steps in the production process.

A. Purchases of materials in relatively large amounts (i.e., lot sizes).

31. Which of the following statements regarding a JIT system is (are) true?

I. Materials are purchased and goods are produced only as required.

II. Employees are highly skilled at single tasks in an effort to maintain quality control.

III. A JIT system is characterized by many small purchases of raw materials.

A. I only.

B. I and II.

C. I and III.

D. II and III.

E. I, II, and III.

C. I and III.

32. Which of the following statements regarding quality is (are) true for a company that has implemented a JIT system?

I. JIT requires quality production facilities, methods, and employees.

II. JIT requires the acquisition of quality raw materials.

III. JIT requires that long-term contracts be negotiated with quality suppliers.

A. II only.

B. I and II.

C. I and III.

D. II and III.

E. I, II, and III.

E. I, II, and III.

33. A firm that uses a JIT purchasing philosophy probably:

A. has many suppliers.

B. has extensive inspection of purchased items at the receiving point.

C. has relatively few suppliers.

D. has deliveries of purchased items made in small lot sizes immediately before the goods are needed in production.

E. has relatively few suppliers and has deliveries of purchased items made in small lot sizes immediately before the goods are needed in production.

E. has relatively few suppliers and has deliveries of purchased items made in small lot sizes immediately before the goods are needed in production.

34. Which of the following statements is (are) true about JIT purchasing as compared with conventional purchasing systems?

I. Quality control by the supplier is more crucial.

II. Adherence to delivery schedules by vendors is more crucial.

III. Long-term supplier contracts are common.

A. I only

B. II only.

C. III only.

D. I and II.

E. I, II, and III.

E. I, II, and III.

35. Which of the following statements about a just-in-time (JIT) purchasing system is false?

A. Since there is minimal backup, companies must acquire quality raw materials.

B. Raw materials are stockpiled to avoid production disruptions.

C. In comparison with experiences under traditional systems, manufacturers normally deal with a reduced number of suppliers.

D. Supplier reliability tends to be more important under a JIT system than under a traditional purchasing system.

E. The average purchase size is smaller with a JIT system than under a traditional purchasing system.

B. Raw materials are stockpiled to avoid production disruptions.

36. Hudson, Inc., is considering a change from a traditional purchasing system to a just-in-time purchasing system. What has probably happened to Hudson's cost per purchase order and inventory unit storage cost to prompt the company to consider such a change?

A. Purchase-order cost is increasing and unit storage cost is increasing.

B. Purchase-order cost is increasing and unit storage cost is decreasing.

C. Purchase-order cost is decreasing and unit storage cost is increasing.

D. Purchase-order cost is decreasing and unit storage cost is decreasing.

E. Both of these costs are relatively stable in amount.

C. Purchase-order cost is decreasing and unit storage cost is increasing.

37. When a company adopts a just-in-time inventory system, it would expect:

A. higher inventories and less frequent purchases.

B. higher inventories and more frequent purchases.

C. lower inventories and less frequent purchases.

D. lower inventories and more frequent purchases.

E. lower inventories and more units purchased on a given order.

D. lower inventories and more frequent purchases.

38. When a company adopts a just-in-time inventory system, it would expect:

A. higher inventories and fewer units purchased on a given order.

B. higher inventories and more units purchased on a given order.

C. lower inventories and fewer units purchased on a given order.

D. lower inventories and more units purchased on a given order.

E. lower inventories and less frequent purchases.

C. lower inventories and fewer units purchased on a given order.

39. Roger Corporation recently abandoned its traditional production and inventory system in favor of a just-in-time system. The company typically dealt with 50 suppliers and placed 450 orders throughout the year. All other things being equal, which of the following choices denotes a likely scenario under the just-in-time system?

Number of Suppliers Number of Orders

A. 35 200

B. 35 750

C. 50 450

D. 60 200

E. 60 750

B. 35 750

40. Harold Corporation recently abandoned its traditional production and inventory system in favor of a just-in-time system. The company typically ordered 700 units of raw material at a time and purchased units that scored a 7 on a 10-point quality scale, with 10 being very close to perfection. All other things being equal, which of the following choices denotes a likely scenario under the just-in-time system?

Order Size Quality Purchased

A. 300 7

B. 300 9

C. 700 9

D. 950 7

E. 950 9

B. 300 9

41. When a company switches from a traditional system to a just-in-time production and inventory system, what often happens to the quality of raw material purchased and the number of vendors that supply the firm?

Quality of Purchases Number of Suppliers

A. Increase Increase

B. Increase Decrease

C. Decrease Increase

D. Decrease Decrease

E. Increase Remain the same

B. Increase Decrease

42. Which of the following would not typically be used or encountered by a firm that is in the service industry?

A. Customer profitability analysis.

B. Activity-based management.

C. Non-value-added activities.

D. Value-added activities.

E. None of the above, as all would typically be used or encountered by a service provider.

E. None of the above, as all would typically be used or encountered by a service provider.

What companies use just

Does Nike use JIT?

What is a just

Do most companies want just in time delivery of their goods?