Performance Analysis (4)

Question 1

When may standard costing and variance analysis sometimes be inappropriate?

Answer 1

In a production environment based on JIT methods or a total quality management approach

Question 2

What happens in a JIT manufacturing environment?

Answer 2

Production is maanged on principle items should not be produced until they are required to meet sales orders

Question 3

What should not be accumulated in JIT

Answer 3

Inventories of WIP and finished goods

Question 4

What does a JIT approach imply?

Answer 4

There are no sales orders, production resources should be kept idle

Question 5

Idle time and JIT manufacturing?

Answer 5

Idle time should be expected

Question 6

idle time and a system of standard costing?

Answer 6

Idle time is an adverse labour efficiency variance, and is undesirable

Question 7

How should the volume of production be restricted in JIT?

Answer 7

To the output capacity of bottleneck resource, meaning that there will inevitably be idle capacity for all resources not bottleneck resource

Question 8

What if idle time variances are reported for a manufacturing operation based on JIT methods?

Answer 8

Variances will encourage managers to use idle capacity in a productive way, by producing more and building up inventories

Question 9

What happens with increases in inventory in JIT?

Answer 9

There will be a higher reported profit

Question 10

What is total quality management (TQM)?

Answer 10

A business philosophy aimed at improving quality

Question 11

Get it right, first time in TQM?

Answer 11

Cost of preventing mistakes is less than cost of correcting them if they occur

Question 12

Continuous improvement in TQM?

Answer 12

Never be satisfied with current achievement, always possible to improve performance

Question 13

Goals of TQM (competitive)

Answer 13

Gain competitive advantage via continuously improved quality

Question 14

Goals of TQM (enhanced quality)

Answer 14

To continuously reduce cost of providing enhanced quality

Question 15

Goals of TQM (Employees)

Answer 15

Innovationthat involves all employees

Question 16

Goals of TQM (customer)

Answer 16

Provide first class customer service

Question 17

Design quality into an organisation’s products and operations from the outset (numer of parts)

Answer 17

Reduce the number of parts in a product

Question 18

Design quality into an organisation’s products and operations from the outset (components)

Answer 18

Use components common to other products in the organisation

Question 19

Design quality into an organisation’s products and operations from the outset (physical)

Answer 19

Improve physical characteristics to meet customers’ needs