Managerial Accounting: Tools for Business Decision-Making 6th Canadian Edition by Jerry J. Weygandt

b) 1. Define value, 2. Identify the value stream, 3. Make the value stream flow, 4. Implement a pull system, 5. Strive for perfection.
c) 1. Identify unproductive activities that need to be reduced, 2. Identify push factors causing those unproductive activities, 3. Develop operations so that the work flows smoothly, 4. Strive for perfection, 5. Evaluate the value that has been added.
d) 1. Identify push factors, 2. Develop strategies to turn those factors into pull factors, 3. Assess the value added by steps one and two, 4. Strive for perfection, 5. Repeat the process on a regular basis.
 
 
85. Step one in the lean thinking model requires
a) target costing, that is determining the acceptable cost the customer is willing to pay.
b) an assessment of the potential value that can be added to the firm by adopting the lean manufacturing concept.
c) identifying processes that do not add value to the manufacturing process.
d) identifying push factors that can be converted to pull factors.
 
 
86. Step two in the lean thinking model
a) deals with push and pull factors.
b) is the central element in understanding how a company can evaluate what is value added and what is waste.
c) is always the most time consuming.
d) can be excluded if step one is done correctly.

ANSWERS TO MULTIPLE CHOICE QUESTIONS
 
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
Ans.

6.
d
20.
d
34.
b
48.
d
62.
c
76.
b
 
 

7.
d
21.
b
35.
b
49.
c
63.
d
77.
b
 
 

8.
d
22.
c
36.
d
50.
d
64.
c
78.
a
 
 

9.
b
23.
d
37.
a
51.
b
65.
c
79.
c
 
 

10.
c
24.
c
38.
b
52.
b
66.
d
80.
c
 
 

11.
a
25.
b
39.
c
53.
d
67.
d
81.
a
 
 

12.
d
26.
d
40.
b
54.
a
68.
d
82.
d
 
 

13.
d
27.
a
41.
c
55.
b
69.
b
83.
b
 
 

14.
c
28.
d
42.
b
56.
c
70.
c
84.
b
 
 

15.
c
29.
c
43.
a
57.
a
71.
d
85.
a
 
 

16.
b
30.
b
44.
c
58.
b
72.
a
86.
b
 
 

17.
c
31..
b
45.
a
59.
a
73.
c
 
 
 
 

18.
d
32..
b
46.
c
60.
b
74.
d
 
 
 
 

19.
a
33..
a
47.
a
61.
c
75.
d
 
 
 
 

BRIEF Exercises
 
 
Brief Exercise 87
The Cheepencheerful Bakery Company produces muffins that it sells to hotel chains in the city. It generally breaks even at the end of the year but not always. It only knows this when the company’s external accountants prepare financial statements that are used by the bank and to file tax returns. The company does its best to keep its costs down and as a result does not pay its employees very much.
When the president’s wife, who is the bookkeeper, decided to retire, the president advertised for her replacement. He thought he could find someone who would work for slightly more than minimum wage. This would be in line with his desire to keep costs down.
Comment on the president’s desire to keep his costs down by hiring a poorly paid accountant for his organization.
 
Solution 87
The president is being short-sighted in his desire to keep costs low in a critical area of his company.
As president, he is responsible for planning, directing, and controlling the company’s activities. For a medium sized company, it is difficult for one person to accomplish all of these objectives effectively.
A professionally trained accountant with the proper training and accreditation can assist the president in these areas.
The accountant can help plan targets for profitability and return on assets used in the business. Once these targets are set, the accountant can then help direct the day-to-day activities to ensure the company’s internal procedures are operating efficiently. The accountant can also implement effective internal managerial accounting procedures to ensure that the organizations activities are properly controlled.