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Forever Security Devices (FSD) has introduced a just-in-time production process and is considering adopting lean accounting principles to support its new production philosophy. 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 accounting 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): Click the icon to view the accounting report) (Click the icon to view further information) Read the requirements Requirement 1. What are the cost objects in FSD's lean accounting system? The cost object in lean accounting is the FSD has identified the following area(s) Accounting report (in thousands of dollars) Sales Mechanical Devices Electronic Devices Product A Product B Product C Product D $ 730 $ 580 S 920 $ 410 110 230 75 180 85 225 55 180 105 110 135 Direct materials (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 220 90 45 15 98 30 55 5 106 34 38 17 37 85 185 S 15 $ 75 Forever Security Devices (FSD) has introduced a just-in-time production process and is considering adopting lean accounting principles to support its new production philosophy. 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 accounting 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): Click the icon to view the accounting report.) (Click the icon to view further information) Read the requirements Requirement 1. What are the cost objects in FSD's lean accounting system? The cost object in lean accounting is the FSD has identified the following area(s): More info FSD has determined that each of the two product lines represents a distinct value stream. It has also determined that out of the $180.000 ($45,000+$30.000+$90,000+$15.000) plant-level facility costs, product A occupies 10% of the plant's square footage, product B occupies 30%. product Coccupies 25%, and product Doccupies 25%. The remaining 10% of square footage is not being used. Finally, FSD 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 Product D Direct material (purchases) $ 1955 140 $ 265 $ 75 Forever Security Devices (FSD) has introduced a just-in-time production process and is considering adopting lean accounting principles to support its new production philosophy. 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 accounting 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): (Click the icon to view the accounting report) (Click the icon to view further information) Read the requirements Requirement 1. What are the cost objects in FSD's lean accounting system? The cost object in lean accounting is the FSD has identified the following area(s) - X X Requirements 1. What are the cost objects in FSD's lean accounting system? 2. Compute operating income for the cost objects identified in requirement 1 using lean accounting principles. What would you compare this operating income against? Comment on your results

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