Exercise 19.2


Assume you have just been hired as the management accountant in charge of providing your firm’s


managers with product cost information. Identify the activities you might undertake for the following


four value chain components:


a. Research and development


b. Production


c. Marketing


d. Customer service





Exercise 9.1A


Castner Corporation is considering implementation of a JIT inventory system. The company’s


industrial engineer recently conducted a study to determine the average number of days spent in


each activity of the production process. The following table summarizes her findings:


Production Activity Number of Days


Inspecting materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


Storing materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17


Moving materials into production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3


Setting up production equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2


Cutting materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6


Bending materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5


Assembling finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9


Painting finished products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5


Instructions


a. Identify Castner’s value-added production activities.


b. Identify Castner’s non-value-added production activities.


c. Calculate Castner’s total cycle time.


d. Determine Castner’s manufacturing efficiency ratio.


e. Which of the above activities might be reduced or eliminated if Castner implemented a JIT


system?


f. What ethical issues might be related to eliminating some of the non-value-added activities?

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