Lean accounting. Reliable Security Devices (RSD) has introduced a just-in-time production process and is considering the adoption of lean accounting principles to support its new production phi- losophy. The company has two product lines: Mechanical Devices and Electronic Devices. Two individual products are made in each line. Product-line manufacturing overhead costs are traced directly to product lines and then allocated to the two individual products in each line. The company's traditional cost account- ing system allocates all plant-level facility costs and some corporate overhead costs to individual products. The latest accounting report using traditional cost accounting methods included the following information (in thousands of dollars): Mechanical Devices Electronic Devices Product A Product B Product C Product D Sales $1,400 $1,000 $1,800 $900 150 Direct material (based on quantity used) Direct manufacturing labor Manufacturing overhead (equipment lease, supervision, production control) Allocated plant-level facility costs Design and marketing costs Allocated corporate overhead costs Operating income 400 200 500 300 150 400 120 180 240 400 190 100 80 160 60 190 100 210 84 30 20 40 16 $ 200 $ 210 $ 90 $280 RSD has determined that each of the two product lines represents a distinct value stream. It has also deter- mined that out of the $400,000 ($100,000 + $80,000 + $160,000 + $60,000) plant-level facility costs, prod- uct A occupies 22% of the plant's square footage, product B occupies 18%, product C occupies 36%, and product D occupies 14%. The remaining 10% of square footage is not being used. Finally, RSD has decided that in order to identify inefficiencies, direct material should be expensed in the period it is purchased, rather than when the material is used. According to purchasing records, direct material purchase costs during the period were as follows: Mechanical Devices Electronic Devices Product A Product B Product C Product D Direct material (purchases) $420 $240 $500 $180
Lean accounting. Reliable Security Devices (RSD) has introduced a just-in-time production process and is considering the adoption of lean accounting principles to support its new production phi- losophy. The company has two product lines: Mechanical Devices and Electronic Devices. Two individual products are made in each line. Product-line manufacturing overhead costs are traced directly to product lines and then allocated to the two individual products in each line. The company's traditional cost account- ing system allocates all plant-level facility costs and some corporate overhead costs to individual products. The latest accounting report using traditional cost accounting methods included the following information (in thousands of dollars): Mechanical Devices Electronic Devices Product A Product B Product C Product D Sales $1,400 $1,000 $1,800 $900 150 Direct material (based on quantity used) Direct manufacturing labor Manufacturing overhead (equipment lease, supervision, production control) Allocated plant-level facility costs Design and marketing costs Allocated corporate overhead costs Operating income 400 200 500 300 150 400 120 180 240 400 190 100 80 160 60 190 100 210 84 30 20 40 16 $ 200 $ 210 $ 90 $280 RSD has determined that each of the two product lines represents a distinct value stream. It has also deter- mined that out of the $400,000 ($100,000 + $80,000 + $160,000 + $60,000) plant-level facility costs, prod- uct A occupies 22% of the plant's square footage, product B occupies 18%, product C occupies 36%, and product D occupies 14%. The remaining 10% of square footage is not being used. Finally, RSD has decided that in order to identify inefficiencies, direct material should be expensed in the period it is purchased, rather than when the material is used. According to purchasing records, direct material purchase costs during the period were as follows: Mechanical Devices Electronic Devices Product A Product B Product C Product D Direct material (purchases) $420 $240 $500 $180
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
What are the cost objects in RSD’s lean accounting system?
![Lean accounting. Reliable Security Devices (RSD) has introduced a just-in-time production
process and is considering the adoption of lean accounting principles to support its new production phi-
losophy. The company has two product lines: Mechanical Devices and Electronic Devices. Two individual
products are made in each line. Product-line manufacturing overhead costs are traced directly to product
lines and then allocated to the two individual products in each line. The company's traditional cost account-
ing system allocates all plant-level facility costs and some corporate overhead costs to individual products.
The latest accounting report using traditional cost accounting methods included the following information
(in thousands of dollars):
Mechanical Devices
Electronic Devices
Product A Product B
Product C
Product D
Sales
$1,400
$1,000
$1,800
$900
150
Direct material (based on quantity used)
Direct manufacturing labor
Manufacturing overhead (equipment lease,
supervision, production control)
Allocated plant-level facility costs
Design and marketing costs
Allocated corporate overhead costs
Operating income
400
200
500
300
150
400
120
180
240
400
190
100
80
160
60
190
100
210
84
30
20
40
16
$ 200
$ 210
$ 90
$280](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F041f1230-761a-47cb-b538-471900d07947%2Fa2e3d0a9-9a21-47df-8896-bd1409018818%2Fljnx3bm.jpeg&w=3840&q=75)
Transcribed Image Text:Lean accounting. Reliable Security Devices (RSD) has introduced a just-in-time production
process and is considering the adoption of lean accounting principles to support its new production phi-
losophy. The company has two product lines: Mechanical Devices and Electronic Devices. Two individual
products are made in each line. Product-line manufacturing overhead costs are traced directly to product
lines and then allocated to the two individual products in each line. The company's traditional cost account-
ing system allocates all plant-level facility costs and some corporate overhead costs to individual products.
The latest accounting report using traditional cost accounting methods included the following information
(in thousands of dollars):
Mechanical Devices
Electronic Devices
Product A Product B
Product C
Product D
Sales
$1,400
$1,000
$1,800
$900
150
Direct material (based on quantity used)
Direct manufacturing labor
Manufacturing overhead (equipment lease,
supervision, production control)
Allocated plant-level facility costs
Design and marketing costs
Allocated corporate overhead costs
Operating income
400
200
500
300
150
400
120
180
240
400
190
100
80
160
60
190
100
210
84
30
20
40
16
$ 200
$ 210
$ 90
$280
![RSD has determined that each of the two product lines represents a distinct value stream. It has also deter-
mined that out of the $400,000 ($100,000 + $80,000 + $160,000 + $60,000) plant-level facility costs, prod-
uct A occupies 22% of the plant's square footage, product B occupies 18%, product C occupies 36%, and
product D occupies 14%. The remaining 10% of square footage is not being used. Finally, RSD has decided
that in order to identify inefficiencies, direct material should be expensed in the period it is purchased, rather
than when the material is used. According to purchasing records, direct material purchase costs during the
period were as follows:
Mechanical Devices
Electronic Devices
Product A
Product B
Product C
Product D
Direct material (purchases)
$420
$240
$500
$180](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F041f1230-761a-47cb-b538-471900d07947%2Fa2e3d0a9-9a21-47df-8896-bd1409018818%2Fme54fk.jpeg&w=3840&q=75)
Transcribed Image Text:RSD has determined that each of the two product lines represents a distinct value stream. It has also deter-
mined that out of the $400,000 ($100,000 + $80,000 + $160,000 + $60,000) plant-level facility costs, prod-
uct A occupies 22% of the plant's square footage, product B occupies 18%, product C occupies 36%, and
product D occupies 14%. The remaining 10% of square footage is not being used. Finally, RSD has decided
that in order to identify inefficiencies, direct material should be expensed in the period it is purchased, rather
than when the material is used. According to purchasing records, direct material purchase costs during the
period were as follows:
Mechanical Devices
Electronic Devices
Product A
Product B
Product C
Product D
Direct material (purchases)
$420
$240
$500
$180
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