Chapter12 Solutions-Hansen6e

Chapter12 Solutions-Hansen6e - CHAPTER 12 ACTIVITY-BASED...

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CHAPTER 12 ACTIVITY-BASED MANAGEMENT QUESTIONS FOR WRITING AND DISCUSSION 1. The two dimensions are the cost dimension and the process dimension. The cost di- mension is concerned with accurate as- signment of costs to cost objects, such as products and customers. Activity-based costing is the focus of this dimension. The second dimension—the process dimension —provides information about why work is done and how well it is done. It is con- cerned with cost driver analysis, activity analysis, and performance measurement. This dimension offers the connection to the continuous improvement world found in the advanced manufacturing environment. 2. Driver analysis is concerned with identify- ing the root causes of activity costs. Know- ing the root causes of activity costs is the key to improvement and innovation. Once a manager understands why costs are be- ing incurred, then efforts can be taken to improve cost efficiency. Driver analysis is a part of process value analysis—along with activity analysis and performance measure- ment. 3 Activity analysis is concerned with identify- ing activities performed by an organization, assessing their value to the organization, and selecting and keeping only those that are value-added. Selecting and keeping value-added activities bring about cost re- duction and greater operating efficiency, thus providing support for the objective of continuous improvement. 4. Value-added activities are necessary activi- ties. Activities are necessary if they are mandated or if they are not mandated and satisfy three conditions: (1) they cause a change of state, (2) the change of state is not achievable by preceding activities, and (3) they enable other activities to be per- formed. Value-added costs are costs caused by activities that are necessary and efficiently executed. 5. Non-value-added activities are unneces- sary activities or necessary activities that are inefficient and improvable. An example is moving goods. Non-value-added costs are those costs caused by non-val- ue-added activities. An example is the cost of materials handling. 6. (1) Activity elimination: the identification and elimination of activities that fail to add value. (2) Activity selection: the process of choosing among different sets of activities caused by competing strategies. (3) Activity reduction: the process of decreasing the time and resources required by an activity. (4) Activity sharing: increasing the efficien- cy of necessary activities using economies of scale. 7. A kaizen standard is the planned improve- ment for the coming period. The kaizen subcycle implements the improvement, checks it, locks it in, and then begins a search for additional improvements. The maintenance subcycle sets a standard based on prior improvements, executes, and checks the results to make sure that performance conforms to the new results. If not, then corrective action is taken. 8.
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Chapter12 Solutions-Hansen6e - CHAPTER 12 ACTIVITY-BASED...

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