Question 26 (3 points) The primary objective of lean manufacturing is to increas

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Question 26 (3 points)

The primary objective of lean manufacturing is to increase the speed and quality, while reducing the cost of operations.

Question 26 options:

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Question 27 (3 points)

Steel totaling $7,089 was requisitioned from the storeroom for the Cutting Department using the process cost system. The company should ________________.

Question 27 options:

Debit Work in Process - Cutting Department $7,089; Credit Raw Materials $7,089

Debit Raw Materials $7,089; Credit Cash $7,089

Debit Raw Materials $7,089; Credit Work in Process - Cutting Department $7,089

None of the above

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Question 28 (3 points)

Working in Process totaling $6,234 was transferred from Department M to Department N. The company should _______________________.

Question 28 options:

Debit Work in Process - Department M $6,234; Credit Work in Process - Department N $6,234

Debit Work in Process - Department N $6,234; Credit Raw Materials $6,234

Debit Work in Process - Department N $6,234; Credit Work in Process - Department M $6,234

None of the above

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Question 29 (5 points)

The fiscal year for Company T begins in January and ends in December. The Financial Statements for Company T for 2011 reported the totals below:

     $7,000

The Gross Profit for Company T for 2011 is _________________________.

Question 29 options:

$15,000

$7,000

$8,000

None of the above

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Question 30 (4 points)

Company X estimates that it will use 7,000 direct labor hours, and it will incur total Factory Overhead costs of $21,000. The company will sell the finished goods for $5.00 per unit. The predetermined factory overhead rate is ________________.

Question 30 options:

$3.00

$5.00

$0.33

None of the above

Explanation / Answer

Question 26

The statement is "True".

__________

Explanation:

The focus of lean manufacturing is to reduce or completely eliminate the waste. It helps in reducing inventory cost with the use of just in time system inventory system, controlling excess production and minimizing the production of defective units. By concentrating on the removal of non-value adding activities, lean manufacturing also shortens the production cycle, thereby, saving time and resources used in the production process.

__________

Question 27

Debit Work in Process - Cutting Department $7,089; Credit Raw Materials $7,089 (which is Option A)

__________

Explanation:

The movement of raw material (direct) from the storeroom would result in a decrease in raw material inventory. This decrease in reported by crediting the raw material account with the value of inventory so transferred to the production process. Assuming steel as a direct material, its movement from storeroom to production (cutting department) would be indicated by a debit to the work in process.

__________

Question 28

Debit Work in Process - Department N $6,234; Credit Work in Process - Department M $6,234 (which is Option C)

__________

Explanation:

The transfer of work in process from one department to another would result in a decrease in the work in process balance of the the transferring department (as indicated by a credit) and increase in the balance of the transferred department (as indicated by a debit). In the given case, the work in process balance of N would get increased and that of M would get reduced by $6,234.

__________

Question 29

The gross profit for the company can be calculated with the use of following formula:

Gross Profit = Sales - Cost of Goods Sold

where Cost of Goods Sold = Opening Stock + Purchases - Closing Stock

__________

Using the information provided in the question, we get,

Cost of Goods Sold = 12,000 + 3,000 - 7,000 = $8,000

Gross Profit = 15,000 - 8,000 = $7,000 (which is Option B)

__________

Question 30

The predetermined overhead rate can be calculated with the use of following formula:

Predetermined Overhead Rate = Budgeted Factory Overhead Costs/Budgeted Direct Labor Hours

__________

Using the information provided in the question, we get,

Predetermined Overhead Rate = 21,000/7,000 = $3 (which is Option A)

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