Lean Training Quiz On Finance Module! Trivia

1. According to Lean accounting, the way we increase profit is by:

Raising the price

Decreasing pay

Lowering costs

Creating more cushion in the budgets

Since we do not touch price (since the price is determined by the customer), we increase profit by lowering costs through the elimination of waste.

Explanation

Since we do not touch price (since the price is determined by the customer), we increase profit by lowering costs through the elimination of waste.

2. According to Lean accounting, the price is determined by the _______________.

Accounting Department

Customer

Marketing Department

Government

The customer determines value, so the customer sets the price.

Explanation

The customer determines value, so the customer sets the price.

3. Taiichi Ohno said: "Costs do not exist to be calculated. Costs exist to be ________."

Defined

Measured

Analysed

Reduced

While we do need to quantify waste to remove it and to be able to measure the benefits, a lot of accounting practices are processing and overproduction waste. Lean accounting seeks to simplify accounting to ensure that metrics are visible and transparent to ALL.

Explanation

While we do need to quantify waste to remove it and to be able to measure the benefits, a lot of accounting practices are processing and overproduction waste. Lean accounting seeks to simplify accounting to ensure that metrics are visible and transparent to ALL.

4. As a product or service moves through the production system, the cost of correcting an error multiplies by 10. This is known as the _______ rule.

DMARIC

1-10-100

Pareto

80 / 20

The 1-10-100 rule states that rework waste gets more and more expensive to fix as it moves downstream.

Explanation

The 1-10-100 rule states that rework waste gets more and more expensive to fix as it moves downstream.

5. As a company implements Lean, it's financial statements often show a temporary hit to the bottom line as inventory moves to the expense section of the income statement, lowering profits.

True

False

This is one reason Lean accounting has evolved – to more accurately show the benefits of Lean improvements in companies.

Explanation

This is one reason Lean accounting has evolved – to more accurately show the benefits of Lean improvements in companies.

6. Another term for "the law of the vital few" is _______.

The Pareto principle

Lean Accounting

The 1-10-100 Rule

The Customer Service Iceberg

The Pareto principle, also known as the 80 / 20 rule, asserts that 80% of the effects come from 20% of the causes. Pareto analysis is used to target products, service families or processes for improvement initiatives.

Explanation

The Pareto principle, also known as the 80 / 20 rule, asserts that 80% of the effects come from 20% of the causes. Pareto analysis is used to target products, service families or processes for improvement initiatives.

7. The cost to serve equals the hourly rate an employee is paid.

True

False

The cost to serve includes labor, other compensation, training, management infrastructure, and many other inputs.

Explanation

The cost to serve includes labor, other compensation, training, management infrastructure, and many other inputs.

8. A more detailed and thorough version of the Plan, Do, Check Act / Kaizen cycle that we use for quantifying and implementing process improvement activities is:

1-10-100

DMARIC

Pareto

Six Sigma

Define, Measure, Analyse, Recommend, Improve (or Implement), Control. It is important to set a scope, measure the processes within it, and analyze the work (including root cause analysis) before recommending process improvement activities. We need to be able to demonstrate ROI and to measure the future state based on the as-is benchmark.

Explanation

Define, Measure, Analyse, Recommend, Improve (or Implement), Control. It is important to set a scope, measure the processes within it, and analyze the work (including root cause analysis) before recommending process improvement activities. We need to be able to demonstrate ROI and to measure the future state based on the as-is benchmark.

9. A dollar saved is a whole dollar just as a dollar earned is a whole dollar.

True

False

A dollar saved IS a whole dollar but a dollar earned is NOT a whole dollar; To make a dollar, we need to spend money (the cost to sell).

Explanation

A dollar saved IS a whole dollar but a dollar earned is NOT a whole dollar; To make a dollar, we need to spend money (the cost to sell).

10. Space can be maximised by reducing what kind of waste(s)?

Motion

Inventory

Waiting

Re-work

Motion & inventory are the two wastes that most lead to wasted space. Inventory just simply takes up space. And, if you can reduce motion waste and place people and their machines in locations to ensure flow, you simply need less space! Maximizing space can save a lot of money.

Explanation

Motion & inventory are the two wastes that most lead to wasted space. Inventory just simply takes up space. And, if you can reduce motion waste and place people and their machines in locations to ensure flow, you simply need less space! Maximizing space can save a lot of money.

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