T, F. It is possible to have costs that have no determinable behavior when the p
ID: 2590342 • Letter: T
Question
T, F. It is possible to have costs that have no determinable behavior when the product is unique and its proto-type has not been produced. T, F. In a value-based system, full product cost includes the cost of direct materials and direct labor, but also the costs of all production and production activities required to satisfy the customer T, F. A supply chain is an independent collection of organizations that supply mate rials, products or services to a customer. T, f. Although machine hours are a key measure in a traditional production environment, most lean organizations focus on direct labor hours instead. T. F. ABM and lean are similar because both analyze processes and identify value-adding and non-value-adding activities 11. 12. 13. 14. 15.Explanation / Answer
11. “T” – This is because as the proto type has not been developed the company will not have an idea about the variable expenses and the overheads. Prototype is a preliminary version and once this version is developed there will be fair idea with regards to material costs, labor costs and overheads.
12. “T” – This is because in a value based system the price of the product is determined on the basis of the potential value that the product will bring to a customer. Hence its cost will include all costs that help in generating that value.
13. “T” – This is because a supply chain consists of a network of suppliers who, although are connected, but remain independent.
14. “F” – This is because lean organizations focus on doing more with less and hence the emphasis is on reducing both machine hours as well as direct labor hours.
15. “T” – Both ABM and lean operations are value based systems.
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