Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 4, Problem 5.1GBP
Defining Concepts of Target Costing, Just-in-Time, and Lean Manufacturing
In recent years, the managerial concepts of target costing, just-it-time inventory systems, and lean manufacturing processes have received considerable attention from manufacturing companies. Increased competition in the marketplace and growing pressure have led companies to focus efforts on cost-cutting measures wherever possible generating acceptable profits.
Briefly define each of these concepts.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Describing the balanced scorecard and identifying key performance indicators for each perspective
Consider the following key performance indicators, and classify each according to the balanced scorecard perspective it addresses. Choose from financial perspective, customer perspective, internal business perspective, or learning and growth perspective.
a. Number of employee suggestions implemented
b. Revenue growth
c. Number of on-time deliveries
d. Percentage of sales force with access to real-time inventory levels
e. Customer satisfaction ratings
f. Number of defects found during manufacturing
g. Number of warranty claims
h. Return on investment
i. Variable cost per unit
j. Percentage of market share
k. Number of hours of employee training
l. Number of new products developed
m. Yield rate (number of units produced per hour)
n. Average repair time
o. Employee satisfaction
p. Number of repeat customers
Which of the following statements is not a
characteristic of a target costing system?
It is a good system to compare the cost of your
products with that of your competitors
Assists with ensuring that a business can
achieve its desired profit levels
Focuses on cost reductions after the product has
been designed
Focuses on the manufacturing processes to see
if improvements can be made from a cost
perspective.
Answer the following questions:
What are the factors of incremental analysis such as relevant costs, opportunity costs, and sunk costs?
What is the incremental analysis approach and what are its scopes in the management accounting?
Why incremental analysis is important in an organization and what are the prospect of it in the manufacturing organization?
How various types of incremental analysis help management to make an effective decision?
What is the relationship between the opportunity cost and rational decision making?
Describe the effectiveness and prospect of incremental analysis in the context of ethical organization that ties with management accounting.
Describe the effectiveness of incremental analysis in terms of making decision.
What are the prospects of incremental analysis in the ethical manufacturing organization?
How the concept of incremental analysis is relevant in the context of management accounting?
Chapter 4 Solutions
Managerial Accounting
Ch. 4 - What is the difference between a volume-based cost...Ch. 4 - Explain the statement that traditional costing...Ch. 4 - Prob. 3QCh. 4 - How does activity-based costing differ from...Ch. 4 - What types of business might use activity-based...Ch. 4 - Prob. 6QCh. 4 - Prob. 7QCh. 4 - Prob. 8QCh. 4 - Why must costs be classified into different...Ch. 4 - Prob. 10Q
Ch. 4 - Prob. 11QCh. 4 - Explain the difference between the activity-rate...Ch. 4 - Define activity-based management and explain how...Ch. 4 - Prob. 14QCh. 4 - Prob. 15QCh. 4 - What is non-value-added activity. Considering the...Ch. 4 - Prob. 17QCh. 4 - Prob. 18QCh. 4 - Prob. 19QCh. 4 - Prob. 20QCh. 4 - Prob. 1MCCh. 4 - Both traditional and ABC cost systems focus on...Ch. 4 - Prob. 3MCCh. 4 - Number of setups is an example of a a. Unit-level...Ch. 4 - Prob. 5MCCh. 4 - Prob. 6MCCh. 4 - Prob. 7MCCh. 4 - Prob. 8MCCh. 4 - Prob. 9MCCh. 4 - Prob. 10MCCh. 4 - Prob. 1MECh. 4 - Prob. 2MECh. 4 - Prob. 3MECh. 4 - Identifying terms in ABC and ABM Use the following...Ch. 4 - Prob. 5MECh. 4 - Prob. 6MECh. 4 - Assigning Costs Using Activity Proportions Refer...Ch. 4 - Calculating Activity Rates for ABC System Lakeside...Ch. 4 - Prob. 9MECh. 4 - Prob. 10MECh. 4 - Prob. 11MECh. 4 - Prob. 12MECh. 4 - Classifying Activities According to Level,...Ch. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Assigning Costs Using Activity Rates Refer to the...Ch. 4 - Prob. 5ECh. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Comparing Traditional Costing Systems and...Ch. 4 - Prob. 12ECh. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Identifying Value-Added and Non-Value-Added...Ch. 4 - Prob. 17ECh. 4 - Prob. 18ECh. 4 - Calculating Target Cost Majesty Company uses...Ch. 4 - Assigning Costs using Traditional System, ABC...Ch. 4 - Assigning Costs using Traditional System, ABC...Ch. 4 - Prob. 1.3GAPCh. 4 - Prob. 1.4GAPCh. 4 - Prob. 1.5GAPCh. 4 - Prob. 2.1GAPCh. 4 - Prob. 2.2GAPCh. 4 - Prob. 2.3GAPCh. 4 - Prob. 2.4GAPCh. 4 - Prob. 2.5GAPCh. 4 - Prob. 3.1GAPCh. 4 - Prob. 3.2GAPCh. 4 - Prob. 3.3GAPCh. 4 - Prob. 3.4GAPCh. 4 - Prob. 3.5GAPCh. 4 - Prob. 3.6GAPCh. 4 - Prob. 3.7GAPCh. 4 - Prob. 3.8GAPCh. 4 - Prob. 4.1GAPCh. 4 - Describing the Impact of ABM and TQM on a Company...Ch. 4 - Prob. 4.3GAPCh. 4 - Prob. 4.4GAPCh. 4 - Describing the Impact of ABM and TQM on a Company...Ch. 4 - Prob. 4.6GAPCh. 4 - Prob. 4.7GAPCh. 4 - Prob. 4.8GAPCh. 4 - Prob. 5.2GAPCh. 4 - Prob. 1.1GBPCh. 4 - Prob. 1.2GBPCh. 4 - Prob. 1.3GBPCh. 4 - Prob. 1.4GBPCh. 4 - Prob. 1.5GBPCh. 4 - Prob. 2.1GBPCh. 4 - Prob. 2.2GBPCh. 4 - Prob. 2.3GBPCh. 4 - Prob. 2.4GBPCh. 4 - Prob. 2.5GBPCh. 4 - Prob. 3.1GBPCh. 4 - Selecting Cost Drivers, Assigning Costs using...Ch. 4 - Prob. 3.3GBPCh. 4 - Prob. 3.4GBPCh. 4 - Prob. 3.5GBPCh. 4 - Prob. 3.6GBPCh. 4 - Prob. 3.7GBPCh. 4 - Prob. 3.8GBPCh. 4 - Prob. 4.1GBPCh. 4 - Prob. 4.2GBPCh. 4 - Prob. 4.3GBPCh. 4 - Prob. 4.4GBPCh. 4 - Selecting Cost Drivers, Assigning Costs Using...Ch. 4 - Prob. 4.6GBPCh. 4 - Prob. 4.7GBPCh. 4 - Prob. 4.8GBPCh. 4 - Defining Concepts of Target Costing, Just-in-Time,...Ch. 4 - Defining Concepts of Target Costing, Just-in-Time,...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Consider the following list of scorecard measures: a. Product profitability b. Ratings from customer surveys c. Number of patents pending d. Strategic job coverage ratio e. Revenue per employee f. Quality costs g. Percentage of market h. Employee turnover percentages i. First-pass yields j. On-time delivery percentage k. Percentage of revenues from new sources l. Economic value added Required: Classify each measure according to the following: perspective, financial or nonfinancial, subjective or objective, and external or internal. When the perspective is process, identify which type of process: innovation, operations, or post-sales service.arrow_forwardLean manufacturing is characterized by all but one of the following: a. Employee empowerment b. Total quality management c. Inventories of goods awaiting further processing or consumption d. Elimination of wastearrow_forwardContinuous improvement is the governing principle of a lean accounting system. Following are several performance measures. Some of these measures would be associated with a traditional standard-costing accounting system, and some would be associated with a lean accounting system. a. Materials price variances b. Cycle time c. Comparison of actual product costs with target costs d. Materials quantity or efficiency variances e. Comparison of actual product costs over time (trend reports) f. Comparison of actual overhead costs, item by item, with the corresponding budgeted costs g. Comparison of product costs with competitors product costs h. Percentage of on-time deliveries i. First-time through j. Reports of value- and non-value-added costs k. Labor efficiency variances l. Days of inventory m. Downtime n. Manufacturing cycle efficiency (MCE) o. Unused (available) capacity variance p. Labor rate variance q. Using a sister plants best practices as a performance standard Required: 1. Classify each measure as lean or traditional (standard costing). If traditional, discuss the measures limitations for a lean environment. If it is a lean measure, describe how the measure supports the objectives of lean manufacturing. 2. Classify the measures into operational (nonfinancial) and financial categories. Explain why operational measures are better for control at the shop level (production floor) than financial measures. Should any financial measures be used at the operational level? 3. Suggest some additional measures that you would like to see added to the list that would be supportive of lean objectives.arrow_forward
- The following series of statements or phrases are associated with product life-cycle viewpoints. Identify whether each one is associated with the marketing, production, or customer viewpoint. Where possible, identify the particular characteristic being described. If the statement or phrase fits more than one viewpoint, label it as interactive. Explain the interaction. a. Sales are increasing at an increasing rate. b. The cost of maintaining the product after it is purchased. c. The product is losing market acceptance and sales are beginning to decrease. d. A design is chosen to minimize post-purchase costs. e. Ninety percent or more of the costs are committed during the development stage. f. The length of time that the product serves the needs of a customer. g. All the costs associated with a product for its entire life cycle. h. The time in which a product generates revenue for a company. i. Profits tend to reach peak levels during this stage. j. Customers have the lowest price sensitivity during this stage. k. Describes the general sales pattern of a product as it passes through distinct life-cycle stages. l. The concern is with product performance and price. m. Actions taken so that life-cycle profits are maximized. n. Emphasizes internal activities that are needed to develop, produce, market, and service products.arrow_forwardClassify each of the following performance measures into the balanced scorecard perspective to which it relates: financial perspective, internal operations perspective, learning and growth perspective, or customer perspective. A. Employee satisfaction surveys B. Units of waste per production process, uniformity of products and inventory control C. Number of energy-efficient bulbs replaced D. Management training course certificates awarded E. Divisional profit F. Number of customer referralsarrow_forwardAn inventory system that organizations use to increase efficiency and decrease waste is ______________________________. corporate social responsibility just-in-time manufacturing total quality management Lean Six Sigmaarrow_forward
- Discuss how the strategic management accounting technique target costing could offer Green opportunities for improving performance and ways to seek to achieve cost reduction.arrow_forwardCost-volume-profit analysis is used to make many decisions, including product pricing and controlling costs. Why do managers put such a great amount of emphasis on controlling fixed costs in their organizations?arrow_forwardA large manufacturing firm is attempting to simultaneously improve quality and productivity. Which current trend in managerial accounting will inform this firm's decision-making process? A. Balanced Scorecard B Just-in-time Inventory c. Lean Manufacturing D. Economic order Quantityarrow_forward
- Cost effectiveness is a factor that needs to be kept in high consideration in decision making. To achieve this, effective cost ascertaiment approaches may be necessary. keeping in mind that changes are taking place in the business environment due to globalization and technology innovation. Discuss the above statement in line with the overall cost accounting philosophy.arrow_forwardMastery Problem: Variable Costing for Management Analysis Absorption vs. Variable Operating income is one of the most important items reported by a company. Depending on the decision-making needs of management, operating income can be determined using absorption costing or variable costing. Select whether the following characteristics are most often associated with absorption costing or variable costing. Required under generally accepted accounting principles (GAAP) Often used for internal use in decision making Cost of goods manufactured includes only variable manufacturing costs Used in reports prepared for external users Fixed factory overhead costs are not part of cost of goods manufactured Both fixed and variable factory costs are included in cost of goods sold and inventory Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of…arrow_forwardThe following is a list of terms related to managerial accounting practices. 1. Activity-based costing. 2. Just-in-time inventory. 3. Balanced scorecard. 4. Value chain. Match each of the terms with the statement below that best describes the term. Terms Description (a) Activity-based CostingBalanced ScorecardJust-in-time InventoryValue Chain A performance-measurement technique that attempts to consider and evaluate all aspects of performance using financial and nonfinancial measures in an integrated fashion. (b) Activity-based CostingBalanced ScorecardJust-in-time InventoryValue Chain The group of activities associated with providing a product or performing a service. (c) Activity-based CostingBalanced ScorecardJust-in-time InventoryValue Chain An approach used to reduce the cost associated with handling and holding inventory by reducing the amount of inventory on hand. (d) Activity-based CostingBalanced…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Ethical Decision Making in Management; Author: GreggU;https://www.youtube.com/watch?v=6UrBO-cL27Q;License: Standard Youtube License