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Management Accounting: Concepts,
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Chapter 8 Extra MC Solution

James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Chapter 8 | MAAW's Textbook Table of Contents

1. Which of the following statements is true? Both ABC and JIT

b. provide more accurate product costs than traditional systems.

2. Which of the following concepts or techniques is (are) consistent with the JIT philosophy?

d. a and b.

3. Which of the actions stated below is not consistent with JIT purchasing?

e. Increased number of vendors to obtain competitive prices.

4. The value chain concept refers to the linked set of value adding activities performed

e. from suppliers through an organization's customer service activities.

5. If the cells in a JIT system are considered departments, then departmental overhead rates are likely to be

a. more accurate in a just-in-time production system than in a traditional production system.

6. A JIT production system would not include an emphasis on

a. the quantity of individual output.

7. The language of JIT includes many terms. Which two of the following terms refer to finding and correcting defects as they occur?

e. jidoka and autonomation.

8. The value added concept includes the value added

b. by the company’s production activities.

9. The value chain concept includes the value added

e. by the company’s vendors, production, distribution and customer service activities.

10. Which of the following charts or diagrams is the most applicable to the 80/20 rule?

a. pareto diagram.

11. Which of the following concepts or techniques is (or are) consistent with a JIT production system?

b. Empowering production line workers to stop production to fix problems.

12. A JIT production system would probably include an emphasis on

e. b and c.

13. Which of the following concepts or techniques is not (are not) consistent with a JIT production system?

a. Using a computerized production scheduling and control system.

14. Overhead allocations are likely to be

b. more accurate in a cellular production system than in a traditional production system.

15. Which of the following statements is false? Both ABC and JIT

d. a and c.

16. Which of the actions stated below is not consistent with JIT purchasing?

d. a and b.

17. In the theory of constraints, throughput refers to

b. sales dollars less direct materials costs.

18. In the theory of constraints, the pace of a non-bottleneck production operation is controlled by the pace of

c. a bottleneck operation.

19. One of the key ideas in Goldratt's theory of constraints is to maximize throughput by

b. balancing the flow of work in the plant.

20. Producing more inventory than needed to meet customer demand can be used to increase net income in

b. Absorption costing.

21. The main difference between ABC and ABM is that

c. ABC emphasizes tracing costs to cost objects, while ABM emphasizes tracing costs and managing processes and work.

22. Let throughput costing net income = NIT, direct costing net income = NID, and absorption costing net income = NIA. Then, when production exceeds sales, the following will tend to occur.

d. NIT < NID < NIA.

23. An objective in the theory of constraints is to

b. balance the flow of work by allowing the most binding constraint to set the pace for the plant.

24. Which of the following represent manual systems designed to support continuous flow manufacturing?

a. JIT’s kanban system.

25. Which of the following is not considered to be a tool useful in supporting continuous improvement by advocates of JIT?

e. Accounting variance analysis.

26. Which of the following represent characteristics of a JIT accounting system?

e. all of the above.

27. Which of the following represent pull systems as opposed to push systems?

d. a and b.

28. Assume the unit costs of Product X are: DM = $100, DL = $50 and Variable factory overhead = $60. If the company uses a backflush system based on throughput accounting, what amount would be backflushed when 1,000 units remain in finished goods at the end of a period?

b. 100,000.

29. Using the same unit costs and situation described in the previous question, what amount would be backflushed based on direct costing?

e. 210,000.

The MNX Company produces plywood. The budgeted costs for the product are given below.

30. The ending finished goods inventory under absorption costing is

c. $18,000.

31. The ending finished goods inventory under direct costing is

b. $15,000.

32. The ending finished goods inventory under throughput costing is

a. $10,000.

33. Gross profit for MNX Company is

d. $108,000.

34. Contribution margin for MNX Company is

c. $117,000.

35. Throughput for MNX Company is

a. $180,000.

36. Operating income on an absorption costing basis is

d. 60,000.

37. Operation income on a direct costing basis is

c. $57,000.

38. Operating income on a throughput costing basis is

b. $52,000.

39. Operating income for year 2 based on an absorption costing is

a. $67,000.

40. Operating income for year 2 based on direct costing is

b. $70,000.

41. Operating income for year 2 based on throughput costing is

c. $75,000.

42. The term kaizen is more closely related to which of the following terms?

c. plan-do-check-action.

43. The drum in a theory of constraints system

d. sets the pace.

44. The rope in a theory of constraints system

a. enforces the pace.

45. The buffer in a theory of constraints system

c. protects the pace.

46. In a theory of constraints system, throughput is

a. the money flowing into the system.

47. Which of the following charts or diagrams shows relationships to reveal problem causes?

d. fishbone diagram.

48. Which of the following terms is more closely related to identifying and correcting problems as they occur?

e. jidoka.

49. Which of the following terms is more closely related to traditional manufacturing concepts, as opposed to the lean enterprise concepts?

a. value added.

50. Which of the following terms is more closely related to the lean enterprise manufacturing concepts, as opposed to the traditional concepts?

e. demand pull system.

51. Which of the techniques below penalizes a company for building inventory beyond the current demand?

d. throughput costing.

52. The distinction between managing costs and managing activities was developed by

d. H. Thomas Johnson.

53. Just-in-time techniques are applicable to

d. all of the above.

54. When a company changes from a top down vertical organization to a bottom up just-in-time organization, the number of job classifications tends to

c. decrease.

55. Which of the following terms refers to all of a company’s value creating activities that are required to produce, distribute and service a product?

b. Value chain.

56. Which of the following terms refers to the value created during production?

c. Value added.

57. The concept of quality at the source is inconsistent with

e. top down control.

58. Changing from a traditional factory layout to a just-in-time cellular layout would tend to create

a. more accurate product costs.

59. In a demand pull system, each worker performs activities or operations

c. at the pace authorized by workers or operations down stream.

60. Which of the following tends to be inconsistent, or promote behavior that is inconsistent, with the just-in-time philosophy?

e. all of the above.

61. Applying the concepts of just-in-time tends to reduce

e. all of the above.

62. Which of the following is not a tool applicable to just-in-time.

b. Overhead variances.

63. Which of the following statements is, or are false? Both ABC and JIT

e. a and c.

64. Which of the following is, or are inconsistent with the JIT philosophy? An emphasis on

c. Variance analysis.

65. Which of the actions stated below is consistent with JIT purchasing?

a. Reduced inspection of incoming materials.

66. A JIT production system would include an emphasis on

e. b and c.

67. In the language of JIT, which of the following terms refers to correcting defects as they occur?

c. Jidohka.

68. If JIT cells are considered to be departments, then departmental overhead rates are likely to

b. generate less accurate product cost in a traditional production system than in a JIT system.

69. The linked set of value adding activities performed from suppliers through an organization's customer service activities is referred to as

a. the value chain concept.

70. Rearranging a factory from a traditional plant layout to a cellular plant layout tends to

c. increase the proportion of direct product costs to total product costs.

71. Which of the following is or are consistent with a JIT accounting system?

d. a and b.

72. In the theory of constraints, throughput is

d. a. and b.

73. In the theory of constraints, a constraint is

e. a., b. and c.

74. A bottleneck is where

d. a. and b.

75. In the theory of constraints, inventory includes

e. a., b. and c.

76. In comparing the return of investment calculations in throughput accounting and GAAP accounting, which of the following will be different when the amount of inventory changes?

e. a., b. and c.

77. According to Goldratt, floating bottlenecks are created by

d. the combination of a., b. and c.

78. According to the theory of constraints, a non-constraint is utilized when

c. when it is producing throughput.

79. In the theory of constraints, balancing the flow of work requires

b. working at the pace set by the constraint.

80. Using Goldratt’s "evaporating cloud" technique refers to

a. identifying a faulty assumption in a conflict or issue.

81. Goldratt is opposed to

d. a. and c.

82. In the theory of constraints, the goal is

c. to make money now and in the future.

83. Throughput is

a. money generated by the company.

84. In TOC, operating expense excludes

b. direct material cost.

85. In the theory of constraints, inventory is defined as

b. total assets.

86. In the theory of constraints, decreasing inventory (as defined in TOC) without affecting throughput or operating expense, would automatically

c. increase return on investment.

87. When finished goods inventory decreases, (i.e., where the number of products sold is greater than the number of products produced) net income based on throughput costing

a. will be greater than net income based on either absorption costing or direct costing.

88. According to Goldratt, floating bottlenecks are caused by the combination of

d. a balanced plant, dependent events and statistical fluctuations.

89. In the theory of constraints, a non-bottleneck operation producing at it’s own pace would

b. always be activated, but not always utilized.

90. In the drum-buffer-rope method, material inventory buffers are placed

d. directly upstream from the drum.

91. According to the theory of constraints, which of the following is, or are, global measurements

c. throughput.

92. In the theory of constraints, the goal is

e. none of the above.

93. ROI in the theory of constraints is

d. (Throughput - operating expense)/Inventory.

94. In TOC, operating expense excludes

e. None of these.

95. In the theory of constraints, product inventory (i.e., inventory in traditional accounting) includes

a. direct materials.

96. In the theory of constraints, which of the following represent assets?

a. direct materials.

97. In the theory of constraints, increasing inventory (as defined in TOC) without affecting throughput or operating expense, would automatically

d. decrease return on investment.

98. When finished goods inventory increases, (i.e., where the number of products sold is less than the number of products produced) net income based on throughput costing

b. will be less than net income based on either absorption costing or direct costing.

99. According to the theory of constraints, which of the following is not, or are not global measurements?

d. a and b.

Chapter 8 Extra MC Questions