Chapter 26: Quick Study

QS D-1: Lean vs. Traditional Business Practices Identify each statement as applying to Lean (L) or Traditional (T) businesses: 1. 2. 3. 4. 5. 6. Production begins with sales forecasts: T Uses “pull” production: L Aims for zero defects: L Uses large batch sizes: T Quality is controlled at each process: L Uses just-in-time inventory systems: L QS D-2: Lean vs. Traditional Business Practices Identify each statement as applying to Lean (L) or Traditional (T) businesses: 1. 2. 3. 4. 5. 6. 7. 8. Production begins with a customer order: L Reducing defects is not a priority: T Inventory levels are lower: L Wait times are long: T Uses small batch sizes: L Quality control is only at product completion: T Cycle times are shorter: L Move times are longer: T QS D-3: Lean Accounting for Materials Prepare a journal entry for the purchase of $28,000 of raw materials on credit under lean accounting. Debit Work in Process Inventory Credit Accounts Payable $28,000 $28,000 QS D-4: Lean Accounting for Conversion Costs 1. Apply Conversion Costs: Debit Work in Process Inventory Credit Conversion Costs $43,600 $43,600 2. Record Actual Conversion Costs (to "Various Accounts"): Debit Conversion Costs $43,600 Credit Various Accounts $43,600 QS D-5: Lean Accounting for Cost of Goods Sold 1. Record Sale of Goods: Debit Accounts Receivable Credit Sales $16,800 $16,800 2. Record Cost of Goods Sold: Debit Cost of Goods Sold $11,760 Credit Work in Process Inventory $11,760 QS D-6: Lean Accounting for COGS and Inventory 1. Record Sale of Goods: Debit Accounts Receivable Credit Sales $33,250 $33,250 2. Record Cost of Goods Sold and Remaining Inventory: Debit Cost of Goods Sold $23,250 Debit Finished Goods Inventory $1,860 Credit Work in Process Inventory $25,110 QS D-7: Conversion Cost Rate Calculation • • Budgeted Conversion Costs: $1,207,500 Budgeted Production Hours: 2,100 Conversion Cost Rate per Hour: Conversion Cost Rate=Total Conversion CostsTotal Production Hours=1,207,5002 ,100=575 per hour QS D-8: Conversion Cost Rate and Application 1. Budgeted Conversion Costs: $1,000,000 2. Budgeted Production Hours: 1,600 Conversion Cost Rate per Hour: Conversion Cost Rate=Total Conversion CostsTotal Production Hours=1,000,0001 ,600=625 per hour 3. Journal Entry to Apply Conversion Costs for an Order Using 65 Production Hours: o Applied Conversion Costs: $625 × 65 = $40,625 Debit Work in Process Inventory Credit Conversion Costs $40,625 $40,625 QS D-9: Cycle Time and Cycle Efficiency Given data for calculating (a) cycle time and (b) cycle efficiency: 1. Cycle Time (CT): Sum of process time, inspection time, move time, and wait time. 2. Cycle Efficiency (CE): Cycle Efficiency=ValueAdded Time (Process Time)Total Cycle Time Use given values in the problem to calculate. QS D-10: Cycle Time and Cycle Efficiency Calculations 1. 2. 3. 4. Cycle Time: Sum of all time components. Value-Added Time: Only the process time. Non-Value-Added Time: Sum of inspection, move, and wait times. Cycle Efficiency: Cycle Efficiency=Value-Added TimeTotal Cycle Time Use given values in the problem to calculate. QS D-11: Days’ Sales in Work in Process Inventory • • Work in Process Inventory: $770 Cost of Goods Sold (COGS): $23,404 Days’ Sales in WIP=(WIP InventoryCOGS)×365=(77023,404)×365≈12 days QS D-12: Cost of Quality Report Prepare a cost of quality report based on the provided quality costs, classifying them into prevention, appraisal, internal failure, and external failure categories, and calculating each category’s percentage of total quality costs. QS D-13: Cost of Quality Report for Service Business Prepare a cost of quality report for a service business based on provided quality costs, following the same classification as in QS D-12. QS D-14: Days' Payable Outstanding • • Accounts Payable: $2,055 Cost of Goods Sold (COGS): $18,300 Days’ Payable Outstanding=(Accounts PayableCOGS)×365=(2,05518,300)×365≈ 41 days QS D-15: Days’ Payable Outstanding • • Accounts Payable: $9,569 Cost of Goods Sold (COGS): $28,155 Days’ Payable Outstanding=(Accounts PayableCOGS)×365=(9,56928,155)×365≈ 124 days These solutions cover lean accounting journal entries, key performance metrics, and quality reports needed to assess and improve lean business operations.