Gilmore Corporation Is Investigating the Possibility of Adopting a Lean

question 195

Multiple Choice

Gilmore Corporation is investigating the possibility of adopting a lean thinking philosophy in its manufacturing facilities. The plant manager has done a cost-benefit analysis and has found that the costs of the lean production program exceed the benefits by $115,000. You analyze the situation and make some adjustments to the cost estimates. After doing your analysis, you find that costs still outweigh benefits by less than 5%. Which of the following choices are possible strategies managerial accountants could implement to enhance the operational effectiveness at the manufacturing facilities?

• A)Consider dropping the plan.
• B)Look for ways to lessen costs.
• C)Re-evaluate the value of benefits.
• D)All of the above should be considered.

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Definitions:

Customers Served

Customers served denotes the number of individuals or entities that have received or benefited from a company's products or services.

Laundry Costs

Expenses associated with cleaning textile products, such as clothing, linens, and uniforms.

Flexible Budget

A financial plan that is designed to change in response to the level of activity achieved.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a period.