ADVANCE COST ACCOUNTING

Name : Afrah Azzahira Wismono

Student ID : 008202000053
Class : M ACC 2020 Class 3

Exercise 16-6 Box Scorecard

The following Box Scorecard was prepared for a value stream of Furumo Company

Last Week This Week (7/18/2010)

Operational
Units per person 175 180
On-time delivery 90% 92%
Dock-to-dock days 9 8
First time through 61% 64%
Average product cost $ 75 $ 74

Capacity
Productive 25% 26%
Nonproductive 65% 62%
Available 10% 12%

Financial
Weekly sales $ 800,000 $ 825,000
Weekly material cost $ 320,000 $ 330,000
Weekly conversion cost $ 280,000 $ 280,240
Weekly value stream profit $ 200,000 $ 214,760
ROS* 25% 26%

*ROS : return on sales

Required:
1. How many nonfinancial measures are used to evaluate performance ?
Answer : There are eight non financial measures used to evaluate perform
operational, theree from capacity and one from financial.

Non financial measures are used to evaluate the performance and

financial measures

2. Classify the operational measures as time-based, quality-based, or efficiency-based.

Discuss the significance of each category for lean manufacturing.
Answer :

Classification of operational measures :

Time-based Quality-based
On time delivery First time through
Average product cost

For lean accounting all these categories play a dominant role. Time is important in
relation with order processing and delivery of goods.

Quality is soul of a product, in order to dominate the market it is important it is important to boost
 quality factor thereby defeat cut thought competition.

Efficiency means self sufficiency in terms of material and human resources which is
important to stay constant.

3. What is the role of the planned state column ?

Answer : Planned future state column resembles the expected level of imp
achieved in the coming future. Specific standards are set for diffe
are supposed to be achieved in planned future.

4. Discuss the capacity category and explain the meaning of each measure and its significance.
Answer :

Capacity category means the potentiality of company in producing goods and services
thereby meeting the needs and expectations of the customers.

Productivity: productivity means state and capacity of producing goods and utilization
of resources and inputs in a optimal manner.

Non-productive: stands for weaknesses and imperfection in producing goods which

often leads to lesser sales and cost rise.

Availability: availability is state of delivering the product to customer at required time, at

right place and with reasonable price that is famous as JIT (Just in Time) approach.

5. Discuss the relationship between the financial measures and the measures in the operation
and capacity categories.
Answer : Financial measures are interlinked and interdependent on operat
measures. In fact, performance and outcome of financial categor
using the operational and capacity measures and conversely, wit
operational and capacity measures are of no use.
 Planned Future State
(9/30/2010)

200
98%
5
75%
$ 70

27%
40%
33%

$ 1,000,000
$ 380,000
$ 320,000
$ 300,000
30%

used to evaluate performance four from

e from financial.

ate the performance and effectively of

Efficiency-based
Units sold per person
Dock-to-dock days

it is important to boost
the expected level of improvement to be
standards are set for different categories which

its significance.

and services

nd utilization

quired time, at

n the operation

nterdependent on operational and capacity

come of financial category can be evaluated by
sures and conversely, without financial measures
Problems 16-11 Features and Characteristics Costing

Vishal Company has implemented lean manufacturing systems. One of the value streams of the company manufactures
three producs: A, B, and C. Ecah product goes through three cells, each of which has a team of people and machines.
The operational sequence of the three cells is as follows :

Fabricate > Heat Treat > Assemble

A : 6 minutes 20 minutes 4 minutes Total : 30 minutes

B : 7 minutes 20 minutes 5 minutes Total : 32 minutes
C : 10 minutes 15 minutes 13 minutes Total : 38 minutes

Total conversion cost (excluding materials) of the value stream is $2,000 per production
hour. The cost of materials for each product is $350.

Required :
1. Under the traditional costing method, what is the unit cost for each product ?
(Hint: Use total production time to assign the conversion cost.)

A : $350 + (6 + 20 + 4)/60 x $2,000 = $ 1,350

B : $350 + (7 + 20 + 5)/60 x $2,000 = $ 1,417
C : $350 + (10 + 15 + 13)/60 x $2,000 = $ 1,617

2. Calculate the unit cost of each product using the features and characteristics costing approach.

Production rate :

A : 60 minutes/6 minutes = 10 units per hour

B : 60 minutes/7 minutes = 9 units per hour
C : 60 minutes/10 minutes = 6 units per hour

A : $350 + ($2,000/10) = $ 550

B : $350 + ($2,000/9) = $ 572
C : $350 + ($2,000/6) = $ 683

3. Compare the unit costs obtained from these two approaches.

Under Traditional Costing Under Features and

Method Characteristics Costing
A $ 1,350 $ 550
B $ 1,417 $ 572
C $ 1,617 $ 683
 company manufactures
people and machines.

: 30 minutes
: 32 minutes
: 38 minutes

units per hour

units per hour
units per hour