Deck 14: The Production Cycle

Question 1

Direct labor must be tracked and accounted for as part of the production process.Traditionally,direct labor was tracked using ________ but an AIS enhancement is to use ________ to record and track direct labor costs.

A) job-time tickets; coded identification cards
B) move tickets; coded identification cards
C) employee earnings records; job-time tickets
D) time cards; electronic time entry terminals

Answer 1

A

Question 2

Which type of information below should not be maintained by the AIS in accounting for fixed assets?

A) identification/serial number
B) cost
C) improvements
D) market value

Answer 2

D

Question 3

Using technology such as robots and computer-controlled machinery to shift from mass production to custom order manufacturing is referred to as

A) computer integrated manufacturing (CIM).
B) lean manufacturing.
C) Six Sigma.
D) computer-aided design (CAD).

Answer 3

A

Question 4

Which of the following is not a product design objective?

A) Design a product that meets customer requirements.
B) Design a quality product.
C) Minimize production costs.
D) Make the design easy to track for cost accounting purposes.

Question 5

What is the main difference between MRP-II and JIT manufacturing systems?

A) The length of the planning horizon.
B) JIT uses long-term customer demand for planning purposes, but MRP-II uses short-term customer demand for planning purposes.
C) MRP-II relies on EDI, but JIT does not.
D) There are no significant differences between MRP-II and JIT.

Question 6

What information is necessary to create the master production schedule?

A) engineering department specifications and inventory levels
B) engineering department specifications and sales forecasts
C) special orders information and engineering department specifications
D) sales forecasts, special orders information, and inventory levels

Question 7

An MRP inventory system reduces inventory levels by

A) reducing the uncertainty about when materials are needed.
B) computing exact costs of purchasing and carrying inventory.
C) delivering materials to the production floor exactly when needed and in exact quantities.
D) none of the above

Question 8

The operations list shows

A) the labor and machine requirements.
B) the steps and operations in the production cycle.
C) the time expected to complete each step or operation.
D) all of the above

Question 9

The use of various forms of information technology in the production process is referred to as

A) computerized investments and machines.
B) computerized integration of machines.
C) computer-integrated manufacturing.
D) computer intense manufacturing.

Question 10

The production cycle document that specifies the quantity of each product to be produced and when production should begin is the

A) bill of materials.
B) bill of lading.
C) master production schedule.
D) operations list.

Question 11

Detailed data about reasons for warranty and repair costs is considered an applicable control used to mitigate the threat of

A) underproduction.
B) overproduction.
C) poor product design.
D) suboptimal investment of fixed assets.

Question 12

______ is an efficient way to track and process information about raw materials used in production.

A) A just-in-time inventory system
B) Identifying materials with bar codes or RFID tags
C) A materials resources planning inventory system
D) Job-order costing

Question 13

Pull manufacturing is officially known as

A) manufacturing resource planning (MRP).
B) just-in-time manufacturing system (JIT).
C) the economic order quantity (EOQ) system.
D) ahead-of-time production implementation (ATPI).

Question 14

A master production schedule is used to develop detailed

A) timetables of daily production and determine raw material needs.
B) reports on daily production and material usage.
C) daily reports on direct labor needs.
D) inventory charts.

Question 15

Which objective listed below is not a cost accounting objective for the production cycle?

A) provide information for planning, controlling, and evaluating the performance of production operations
B) provide cost data about products used in pricing and product mix decisions
C) collect and process the information used to calculate inventory and cost of goods sold amounts that appear in the financial statements
D) provide tests of audit control functions as part of the AIS

Question 16

The production cycle is different than the revenue and expenditure cycles for all the following reasons except

A) there are no direct external data sources or destinations.
B) cost accounting is involved in all activities.
C) not all organizations have a production cycle.
D) very little technology exists to make activities more efficient.

Question 17

Which of the following is a key feature of materials requirements planning (MRP-II)?

A) Reducing required inventory levels by scheduling production, rather than estimating needs
B) Minimizing or eliminating carrying and stockout costs
C) Determining the optimal reorder points for all materials
D) Determining economic order quantity for all materials

Question 18

Push manufacturing is officially known as

A) manufacturing resource planning (MRP).
B) just-in-time manufacturing system (JIT).
C) the economic order quantity (EOQ) system.
D) ahead-of-time production implementation (ATPI).

Question 19

The document that authorizes the transfer of raw materials from the storeroom to the production floor is referred to as

A) a bill of materials.
B) a production order.
C) a materials requisition.
D) a move ticket.

Question 20

The AIS compiles and feeds information among the business cycles.What is the relationship between the revenue and production cycles regarding the exchange of information?

A) The revenue cycle provides sales forecast and customer order information to the production cycle, but the production cycle sends information back to revenue about finished goods production.
B) The revenue cycle receives information from the production cycle about raw materials needs.
C) The production cycle sends cost of goods manufactured information back to the revenue cycle.
D) The production cycle does not exchange information with the revenue cycle.

Question 21

Dolly Salem owns and operates a bakery in Charleston,South Carolina.Each afternoon,she prepares a shopping list that describes the quantity and variety of ingredients that she will purchase in the evening from a local food wholesaler.The shopping list is an example of a(an)

A) bill of materials.
B) operations list.
C) production order.
D) materials requisition.

Question 22

For replacement of inventories and assets destroyed by fire or other disasters,an organization needs

A) stand-by facilities.
B) adequate insurance coverage.
C) source data automation.
D) All of the above are correct.

Question 23

In an Activity-Based Costing (ABC)system,a cause-and-effect relationship is known as a

A) cost stimulator.
B) overhead stimulator.
C) cost driver.
D) cost catalyst.

Question 24

The cost of a product liability claim can be classified as a(n)

A) prevention cost.
B) inspection cost.
C) internal failure cost.
D) external failure cost.

Question 25

________ are associated with testing to ensure that products meet quality standards.

A) External failure costs
B) Inspection costs
C) Internal failure costs
D) Prevention costs

Question 26

Dolly Salem owns and operates a bakery in Charleston,South Carolina.Each morning she prepares a list that describes the quantity and variety of cakes and cookies that will be prepared during the day.This list is an example of a(an)

A) bill of materials.
B) operations list.
C) production order.
D) materials requisition.

Question 27

What specific control can help restrict the rights of authorized users to only the portion of a database needed to complete their specific job duties?

A) an access control matrix
B) passwords and user IDs
C) closed-loop verification
D) specific authorization

Question 28

Wee Bee Trucking determines the cost per delivery by summing the average cost of loading,unloading,transporting,and maintenance.This is an example of ________ costing.

A) job-order
B) unit-based
C) activity-based
D) process

Question 29

Wee Bee Trucking determines the cost per delivery by averaging total cost over number of deliveries.This is an example of ________ costing.

A) job-order
B) unit-based
C) activity-based
D) process

Question 30

The best control procedure for accurate data entry is

A) the use of on-line terminals.
B) an access control matrix.
C) passwords and user IDs.
D) automation of data collection.

Question 31

________ identifies costs with the corporation's strategy for production of goods and services.

A) Activity-based costing
B) Job-order costing
C) Process costing
D) Manufacturing costing

Question 32

Dolly Salem owns and operates a bakery in Charleston,South Carolina.She maintains a file that lists the sequence of procedures required to make each of her famous cakes and cookies.These instructions are examples of a(an)

A) bill of materials.
B) operations list.
C) production order.
D) materials requisition.

Question 33

Dolly Salem owns and operates a bakery in Charleston,South Carolina.She maintains a file of recipes that list the ingredients used to make her famous cakes and cookies.These recipes are examples of a(an)

A) bill of materials.
B) operations list.
C) production order.
D) materials requisition.

Question 34

What is the primary drawback to using a volume-driven base,such as direct labor or machine hours,to apply overhead to products in a traditional cost accounting system?

A) The cost accountant may not fully understand how to track direct labor or machine hours.
B) It is difficult for an AIS to incorporate such a measurement into its system.
C) It is difficult for an ERP to incorporate such a measurement into its integrated system.
D) Many overhead costs are incorrectly allocated to products since they do not vary with production volume.

Question 35

What does the first term in the throughput formula,productive capacity,represent?

A) the maximum number of units that can be produced given current technology
B) the percentage of total production time used to manufacture a product
C) the percentage of "good" units produced given current technology
D) the percentage of "bad" units produced given current technology

Question 36

________ are incurred to ensure that products are created without defects the first time.

A) External failure costs
B) Inspection costs
C) Internal failure costs
D) Prevention costs

Question 37

The threat of loss of data exposes the company to

A) the loss of assets.
B) ineffective decision making.
C) inefficient manufacturing.
D) All of the above are correct.

Question 38

Which of the following organization controls should be implemented and maintained to counteract the general threat that the loss of production data will greatly slow or halt production activity?

A) Store key master inventory and production order files on-site only to prevent their theft.
B) Back up data files only after a production run has been physically completed.
C) Access controls should apply to all terminals within the organization.
D) Allow access to inventory records from any terminal within the organization to provide efficient data entry.

Question 39

Overproduction or underproduction can be a threat to an organization.To which process or activity does this threat relate?

A) product design
B) planning and scheduling
C) production operations
D) cost accounting

Question 40

To reduce the threat of theft or destruction of inventories and other fixed assets,the organization may wish to implement which of the following controls?

A) review and approval of fixed asset acquisitions
B) improved and more timely reporting
C) better production and planning systems
D) document all movement of inventory through the production process

Question 41

In activity-based costing,the expenses associated with planning and design of new products are ________ overhead.

A) batch-related
B) product-related
C) companywide
D) expenditure-based

Question 42

The expenses associated with a product recall are ________ costs.

A) prevention
B) inspection
C) internal failure
D) external failure

Question 43

Labor productivity is measured by the quantity produced divided by the labor time required to produce it.All other things held constant,an increase in labor productivity will increase throughput by

A) increasing productive capacity.
B) increasing productive processing time.
C) increasing yield.
D) increasing all components of throughput.

Question 44

In activity-based costing,expenses associated with the purchase of health care insurance for employees are ________ overhead.

A) batch-related
B) product-related
C) companywide
D) expenditure-based

Question 45

Identify and discuss the two documents that are the result of product design activities.

Question 46

The expenses associated with disposal of defective products are ________ costs.

A) prevention
B) inspection
C) internal failure
D) external failure

Question 47

This document appears to be a

A) Materials Requisition.
B) Production Order.
C) Bill of Materials.
D) Move Ticket between production and warehouse functions.

Question 48

At the end of each production run,preventive maintenance is done on the assembly line.The expenses associated with this maintenance are ________ overhead.

A) batch-related
B) product-related
C) companywide
D) department-based

Question 49

Explain what CIM means and its benefits.

Question 50

Which of the following is not a benefit of activity-based costing?

A) Lower cost
B) Better decisions
C) Improved cost management
D) Identification of cost drivers

Question 51

Wee Bee Trucking determines the cost per delivery by identifying variables as cost drivers,and allocating overhead accordingly.This is an example of ________ costing.

A) job-order
B) unit-based
C) activity-based
D) process

Question 52

How many side panels should the company budget for use in week two?
Bill of Materials

Question 53

The expenses associated with quality assurance activities are ________ costs.

A) prevention
B) inspection
C) internal failure
D) external failure

Question 54

What types of data are accumulated by cost accounting? What is the accountant's role in cost accounting?

Question 55

Clint Smith operates a machine shop in Burbank,California.He places bids on small lot production projects submitted by firms throughout the Los Angeles area.Which of the following is most likely to be a cost driver for the allocation of utility costs?

A) Number of units produced
B) Number of labor hours
C) Number of projects completed
D) Sales revenue

Question 56

How many labor hours should the company budget in week three to produce all side panels needed? Round to the nearest hour,if necessary.
Bill of Materials

Question 57

Folding Squid Technologies initiated a just-in-time inventory system in 2010.Now the production manager,Chan Ziaou,wants to apply the same principles to the entire production process.His recommendation is for the company adopt a

A) lean manufacturing system.
B) master production scheduling system.
C) manufacturing resource planning system.
D) computer-integrated manufacturing system.

Question 58

Folding Squid Technologies has installed a new production monitoring system that is expected to reduce system breakdowns by 28%.This system will increase throughput by

A) increasing productive capacity.
B) increasing productive processing time.
C) increasing yield.
D) increasing all components of throughput.

Question 59

In addition to identifying and dealing with defective products before they reach customers,quality management is concerned with initiating process changes that will reduce the number of defective units produced.All other things held constant,a decrease in the number of defective units will increase throughput by

A) increasing productive capacity.
B) increasing productive processing time.
C) increasing yield.
D) increasing all components of throughput.

Question 60

The expenses associated with the use of clean rooms in the production of computer hard drives are ________ costs.

A) prevention
B) inspection
C) internal failure
D) external failure

Question 61

Describe five threats in the production cycle and the applicable control procedures used to mitigate each threat.

Question 62

Discuss the criticisms of traditional cost accounting methods.

Question 63

Discuss the role the accountant can play in the production cycle.

Question 64

What are the two major types of cost accounting systems and what are the differences between the two?

Question 65

What role does the AIS play in the production cycle?

Question 66

Identify and discuss the two common methods of production planning.

Question 67

What is activity-based costing (ABC)? How does it compare with the traditional costing methods? What are the benefits of activity-based costing?

Question 68

Discuss two measures that can address the threats of inefficiencies and quality controls problems.