Okay, let's have a short break now, to do part one of test your knowledge, see what we've learned so far. Question one, how does the Theory of Constraints define throughput? Is it a the speed at which work moves through the constraints in a process be the rate at which constraints are removed from the process. C the rate at which a business process generates money through sales, D, the rate at which the business attracts new customers have a think now which of those is the correct definition of throughput from the Theory of Constraints? And the big reveal is that the answer is C, the rate at which a business generates money through sales. Question two, in the Theory of Constraints, how do we improve profitability?

Is it a increased throughput, be conduct Kaizen events, see implement drum buffer rope or D increase flush through I'm thinking that's a fairly easy one and the answer is a increased throughput. Question three, the Theory of Constraints and lean share a common focus, what is it? Is it a simplifying variance analysis? Is it be eliminating checks and inspections? Is it c reducing corporate overheads? Or is it D improving the flow of work through a business process, which are these is the common focus of the Theory of Constraints and lean few seconds to think.

And then the big reveal it is of course, D improving the flow of work through a business process. Question four, how does throughput accounting define throughput? Is it a net sales less the cost of bought in goods and services? Is it be next time Less the total variable cost is it see process contribution, less corporate overheads and expenses? Is it the sales value of the goods or services produced less their material cost? Okay a couple of seconds to think on that one which is the correct definition of throughput in throughput accounting.

The correct answer is net sales less total variable cost be option D there was almost correct sales value of the goods or services produced less than material cost, but the material costs might not be the only total variable cost there might be other variable costs. Moving on to question five in throughput accounting, investment turns is defined as throughput contribution divided by investment expressed as a ratio. How does it help manage performance? Is it a any action that improves this ratio will improve the profitability of the process. V keeping the ratio between 0.8 and 0.95 indicates that the process is stable. See, it encourages the finance team to use the longest possible asset life in their depreciation and amortization calculations, or D. It provides shareholders and investors with a proxy return on investment.

Pause the video if you need to have a think before we come to the answer, which is a any action that improves this ratio will improve the profitability of the process. Question six Which of the following is not one of the five principles of lean Is it a make value flow to the pool of the customer? b identify and remove the constraint in the process. See at specified value in the eyes of the customer. Or D involve and empower employees which of those is not one of the five principles of lean? Well the answer is B identify and remove the constraint in the process.

And there are the five principles of lean flying in there to remind you question seven in a lean process cost is related to what is it a the level of overheads carried by the organization, be the number of people employed in the process, see the amount of inventory or work in progress in the process? D the rate of flow of work through the process a moment to think there and the answer is D. Cost is related to the rate of flow of work through the process. Question eight Lean Accounting was developed to support the lean philosophy Which of the following is not part of the focus of Lean Accounting is a measure and manage flow with the aim of improving it. B supports continuous improvement. C greatly simplify variance analysis, or D focus on customer value, which is correct, which is not part of the focus of Lean Accounting.

Of course, it's option C to greatly simplify variance analysis. There is no variance analysis in Lean Accounting, thankfully. Question nine. Why, in process performance measures used in Lean Accounting? A they help identify the person responsible for making a mistake. Be the identify the cost of each step in the process, allowing great granularity and reporting.

See they attract through the day by the people that work in the process so that corrective action can be applied as soon as Problems arise, do they accurately measure customer value at each step in the process? Why are in process performance measures used in Lean Accounting? Well, the answer is C they attract through the day, so that people that work in the process can apply corrective action as soon as problems arise. And finally, question 10 relatively few of lean accountings process output and in process measures relate to cost Why is it a finance teams are typically too small to be able to collate and present all the data, the operational measures directly linked to performance and easier to interpret? See, few managers truly understand cost measures and their implication or D customer value is something that cannot be valued in cost terms. Okay, the answer to this one is fairly straightforward.

It is B Operational measures are directly linked to performance, and they're easier to interpret. I'm sure you did well in that quiz, and we'll have another test your understanding section at the end of this course.