chpt 4 faz

chpt 4 faz - accurately attribute these costs in proportion...

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FAQs : Chapter 4 1) Will a JIT system help all types of manufacturing or does it have to have certain characteristics? If so, what? A JIT system can help reduce production costs in many types of manufacturing, but can be most effective where very similar, mass produced products are manufactured. 2) How can cost management help in the manufacturing process? Managers can use cost management analysis to better judge the impact of their decisions on profits. 3) Why do traditional costing systems tend to distort product costs? Traditional costing measures the resources consumed in proportion to the number of products produced. This doesn’t take into account many costs that are not related to the physical volume of units produced. Therefore, traditional costing systems don’t
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Unformatted text preview: accurately attribute these costs in proportion to their production volumes. Traditional costing tends to under cost low volume products and over cost high volume products. 4) Are there times when it makes sense to use traditional costing systems? Yes, traditional costing can be useful when direct labor and materials are the predominant factors of production, when technology is stable, and when there is a limited range of products. 5) How do Activity-based costing systems differ from traditional systems? First, cost pools are defined as activities rather than plant or department cost centers. Second, the cost drivers used to assign activity costs to cost objects are activity drivers based on cause-effect relationships....
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