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Solution Manual, Managerial Accounting Hansen Mowen 8th Editions_ch 16

Solution Manual, Managerial Accounting Hansen Mowen 8th Editions_ch 16

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Published by: jasperkennedy0 on May 24, 2012
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Lean manufacturing is an approach de-signed to eliminate waste and maximizecustomer value. It is characterized by deli-vering the right product, in the right quantity,with the right quality (zero-defect) at the ex-act time the customer needs it and at thelowest possible cost.
The five principles of lean thinking are:
Precisely specify value by each particular product; (2) Identify the "value stream" for each product; (3) Make value flow withoutinterruption; (4) Let the customer pull valuefrom the producer; and (5) Pursue perfec-tion.
Two types of value streams are the order fulfillment value stream and the new productvalue stream.
The order fulfillment valuestream focuses on providing current prod-ucts to current customers. The new productvalue
stream focuses on developing newproducts for new customers.
A value stream may be created for everyproduct; however, it is more common togroup products that use common processesinto the same value stream. One way toidentify the value streams is to use a simpletwo-dimensional matrix, where the activi-ties/processes are listed on one dimensionand the products on a second dimension.
The key factors in being able to produce lowvolume products with great variety are lower setup times and cellular manufacturing. Re-ducing setup times and using manufacturingcells eliminates considerable wait and movetime so that cycle time is dramatically re-duced.
Demand-pull means producing only theproducts when needed and in the quantitiesneeded. Demand-pull systems re-duce/eliminate WIP and finished goods in-ventories. Inventories are the most signifi-cant source of waste in a manufacturingfirm.
Eight sources of waste are: (1) Defectiveproducts; (2)
Overproduction of goods notneeded; (3) Inventories of goods awaiting fur-ther processing or consumption; (4) Unneces-sary processing; (5) Unnecessary movementof people; (6) Unnecessary transport of goods;(7) Waiting; and, (8) The design of goods andservices that do not meet the needs of the cus-tomer.
A focused value stream is dedicated to oneproduct. It includes all the activities andsteps necessary to produce, deliver, andservice the product after it is sold. The re-sources, people, and equipment to accom-plish this are all exclusive to the valuestream, making all the costs directly tracea-ble to the product produced by the valuestream.
Facility costs are assigned using a fixed costper square foot( (total cost/total square feet).If a value stream uses less square feet, itreceives less cost. Thus, the purpose of thisassignment is to motivate value streammangers to find ways to occupy less space. As space is made available, it can be usedfor new product lines or to accommodate in-creased sales
Units shipped are used to discourage theproduction of excess inventories. It also en-courages the reduction and elimination of existing finished goods inventories. The unitcost increases if more units are producedthan sold. The unit cost decreases if areshipped than units produced.
If the products in the value stream are quitesimilar, then the average cost will approx-imate the actual unit product cost. If theproduct mix is relatively stable over time,then the average unit cost can be a goodsignal of overall changes in efficiency withinthe value stream.
Value streams often have excess capacity.In certain decisions, such as make or buy or accept or reject special orders, the changein profitability is the key factor in assessingwhich way to go. In these cases, knowledge
of individual product cost is not needed and,in fact, may be misleading.
The lean control system uses a Box Score-card that compares operational, capacity,and financial metrics with prior week perfor-mances and with a future desired state.Trends over time coupled with the expecta-tion of achieving some desired state in thenear future is the means used to motivateconstant performance improvement. Thus,the lean control approach uses a mixture of financial and nonfinancial measures for thevalue steam. The future desired state re-flects targets for the various measures. Op-erational, nonfinancial measures are alsoused at the cell level.
Life-cycle costing is measuring the costsassociated with a product for its entire lifecycle. Life-cycle management is managingthe activities during the development stageto ensure the lowest total life-cycle cost.Budgeting life-cycle costs can help managersadjust the activities during the developmentstage; furthermore, comparing actual life-cycle costs with budgeted costs should ena-ble managers to improve life-cycle costmanagement in the future using the feed-back from actual results.
Target costing is a cost management me-thod that is used to reduce costs to a levelthat reflects a product’s functions and mar-ket demands and management’s return re-quirements. Costs are reduced to target byproduct and process redesign activities.Product redesign is aided by reverse engi-neering and value analysis.
Balanced Scorecard 
translates an or-ganization’s vision and strategy into opera-tional objectives and measures for four perspectives: financial, customer, process,and learning and growth.
A strategy is the process of choosing themarket and customer segments, identifyingthe critical internal processes, and selectingthe individual and organizational capabilitiesneeded for the process, customer, and fi-nancial objectives.
Lag measures reflect what has happened.Lead measures reflect what may happen.
A testable strategy is a set of linked objec-tives aimed at an overall goal that can berestated into a sequence of cause-and-effecthypotheses.
Double-loop feedback is information thatdeals with both the effectiveness of strategyimplementation and the validity of the as-sumptions underlying the strategy.
The three strategic themes of the financialperspective are revenue growth, cost reduc-tion, and asset utilization.
The five core objectives of the customer perspective are market share, customer re-tention, customer acquisition, customer sa-tisfaction, and customer profitability.
The long-wave of value creation meansanticipating the emerging and potentialneeds of customers and creating new prod-ucts and processes to satisfy those needs.The short-wave of value creation is produc-ing and delivering existing products to cus-tomers.
Cycle time is the length of time required toproduce one product; velocity is the number of units that can be produced in a given pe-riod of time.
Manufacturing cycle efficiency is a ratiocomputed by dividing the processing time bythe sum of processing time, move time, in-spection time, and waiting time. The ideal isto increase efficiency by reducing the nonva-lue-added times of moving, inspection, andwaiting.
Three objectives of the learning and growthperspective are increase employee capabili-ties; increase motivation, empowerment,and alignment; and increase informationsystems capabilities.
1. e2. d3. b4. e5. b6. c7. e8. a
Value Streams:A&D: All common processesB&E: All common processesC: Different from all
other products
16–31. Departmental times:
Processing time (10
30*) 300 minutesWait and move time 53 minutesTotal time 353 minutes*The sum of the unit production times for each department2. Cellular times:Unit Elapsed timeFirst 30 minutesSecond 40Third 50. .. .Tenth 120 minutesIf the cell is continuously producing then the time is 100 minutes (10

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