Management Accounting Boeing

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Case Study A – The Boeing Company

Q1 about analyzing the tasks of the activity in terms of value, time, frequency and cost.

- What criteria were used to classify tasks as value-added (PE and PI) or nonvalue-added (SE and SI)? - Is an activity value-added if it changed the form, fit, or function of the product, for which the customer is willing to pay? - Why is operation 070.00 classified as SE?

- What is the task time versus flow time for the operation 060.00 under 737 EBU? - Why were the tasks valued in $ and not left in hrs?

Q2 about creating two Pareto charts for the tasks of the workshop: one showing the total $ values of all the tasks & one showing the $ values of only the support tasks.

- Will the $ charts that differ across activities (see 737 versus 767 rates) & so the $-based charts discriminate better across activities than labour-hour-based Pareto charts? - Is the $ chart a better basis for division-wide targeting of priorities & improvement goals? - Are $ signals more forceful motivational indicators than labour hours? - What alternative $ rates could have been used?

Q3 about discussing the choice of direct & indirect labour hours as a measurement base for the resources consumed.

- Is cycle time a critical variable influencing the division’s productivity? - May more labour hours on off-line processing reduce cycle time significantly? - Is more analysis necessary to determine the fundamental causes that prevent shorter cycle times & drive up line-item expenses in Exhibit 1-6? - Will a comprehensive ABC require that outcome costs be identified by individual cost drivers?

Q4 focuses on the contracts between traditional methods of budgetary reporting and activity analysis.

- Which is used to provide delayed-outcome measures organized by hierarchical lines? - Which one is to provide real-time information in the improving process? - How is ABC data used to provide strong behavioral reinforcement for value...
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