Deck 11: Conversion Processes and Controls

Question 1

Manufacturing has changed in recent years as a result of each of the following factors except:

A)Globalization
B)Technological advances
C)Increased competition
D)Lack of economic prosperity

Answer 1

D

Question 2

The goal of a physical inventory reconciliation is to

A)Determine the quantity of inventory
B)Compare the physical count with the perpetual records
C)Compare the physical count with the periodic records
D)Determine the quantity of inventory in process

Answer 2

B

Question 3

A company's conversion processes includes all of the following except:

A)Materials
B)Office supplies
C)Labor
D)Overhead

Answer 3

B

Question 4

For which of the following computerized conversion systems is Wal-Mart well known?

A)CAD/CAM
B)MRP-II
C)CIMs
D)JIT

Question 5

According to the textbook, which of the following are the two specific ways in which a company may recognize the need to conduct operations?

A)A sales order is received and a sales forecast is made.
B)A sales order is received and a production schedule is created.
C)A production schedule is created and a physical inventory count is conducted.
D)A sales forecast is made and a production schedule is created.

Question 6

Which of the following statements concerning an operations list is true?

A)It is an engineering document that describes the chain of events within a company's conversion process.
B)It is an engineering document that specifies the descriptions and quantities of component parts within a product.
C)It is a capital budgeting document that describes the chain of events within a company's conversion process.
D)It is a capital budgeting document that specifies the descriptions and quantities of component parts within a product.

Question 7

Which of the following activities is not part of the planning component of the logistics function?

A)Research and development
B)Capital budgeting
C)Human re
D)Scheduling

Question 8

A company must have systems in place to accomplish all of the following except:

A)Capture data
B)Vocalize data
C)Record data
D)Summarize data

Question 9

Which of the following is not considered a benefit of using computerized conversion systems?

A)Automatic computation of materials requirements
B)Increased sales and cost of sales
C)Increased efficiency and flexibility
D)Early error detection and increased accuracy

Question 10

When additional procedures are necessary to bring a defective product up to its required specifications, this is referred to as

A)Rework
B)Scrap
C)Work-in-process
D)Variance reporting

Question 11

The term conversion processes is often used synonymously with:

A)Operations
B)Production
C)Manufacturing
D)All of the above

Question 12

Which of the following activities is an inventory control activity?

A)Engineering
B)Maintenance
C)Routing
D)Quality control

Question 13

Overhead includes all of the following except:

A)Various other expenses necessary to run the operating facility
B)The president's salary
C)Indirect labor
D)Indirect materials

Question 14

Which of the following internal controls is typically associated with the maintenance of accurate inventory records?

A)Performing regular compari
B)Using a just-in-time system to keep inventory levels at a minimum
C)Performing a match of the purchase request, receiving report, and purchase order before payment is approved
D)Using physical inventory counts as a basis for adjusting the perpetual records

Question 15

If a manufacturing company's inventory of supplies consists of a large number of small items, which of the following would be considered a weakness in internal controls?

A)Supplies of relatively low value are expensed when acquired.
B)Supplies are physically counted on a cycle basis, whereby limited counts occur quarterly and each item is counted at least once annually.
C)The stores function is responsible for updating perpetual records whenever inventory items are moved.
D)Perpetual records are maintained for inventory items only if they are significant in value.

Question 16

Which of the following represents a method of managing inventory designed to minimize a company's investment in inventories by scheduling materials to arrive at the time they are needed for production?

A)The economic order quantity (EOQ)
B)Material re
C)First-in, first-out (FIFO)
D)Just-in-time (JIT)

Question 17

A firm expects to sell 1,000 units of its best-selling product in the coming year.Ordering costs for this product are $100 per order, and carrying costs are $2 per unit.Compute the optimum order size, using the EOQ model.

A)10 units
B)224 units
C)317 units
D)448 units

Question 18

Which of the following questions is most likely to be found on an internal control questionnaire concerning a company's conversion processes?

A)Are vendor invoices for materials purchases approved for payment by
B)Are signed checks for materials purchased mailed promptly without being returned to the department responsible for processing the disbursement?
C)Are approved requisitions required when materials are released from the company's warehouse into production?
D)Are details of payments for materials balanced to the total posted to the general ledger?

Question 19

Which of the following terms relates to the control of materials being held for future production?

A)Routing
B)Work-in-process
C)Stores
D)Warehousing

Question 20

The conversion process is initiated when the company recognizes:

A)The receipt of raw materials
B)The shipment of finished goods to customers
C)The need to conduct operations
D)None of the above

Question 21

Which of the following processes focuses on product improvement?

A)Engineering
B)Research and development
C)Production
D)Capital budgeting

Question 22

This schedule outlines the specific timing required for a sales order, including the dates and times designated for the production run:

A)Production schedule
B)Production orders schedule
C)Maintenance and control schedule
D)Human re

Question 23

Within the planning component of the logistics function, which of the following processes is responsible for preparing bill of materials and the operations list?

A)Research and development
B)Capital budgeting
C)Engineering
D)Scheduling

Question 24

The form that authorizes production activities for a particular sales order or forecasted needs is referred to as the:

A)Production schedule
B)Production orders
C)Maintenance and control process
D)Human re

Question 25

The major activities within the conversion process include all but

A)Strategic planning that supports the company's operational goals
B)Optimizing the use of the employees, property, and inventories that are needed in operations
C)Controlling production flows, ensuring product quality
D)Preparing the related cost accounting and financial accounting records

Question 26

Which of the following is NOT a primary component of the logistics function?

A)Planning
B)Re
C)Operations
D)Production

Question 27

The form that describes the chain of events that constitute a product's production is referred to as the:

A)Operations list
B)Bill of materials
C)Engineering
D)Capital budgeting

Question 28

The process of logical, systematic flow of resources throughout the organization is referred to as:

A)Logistics
B)Planning
C)Reporting
D)Sales forecast

Question 29

Which of the following company activities would NOT be considered a productive activity?

A)The manufacture of automobiles
B)The treatment of patients in a medical facility
C)Providing consulting services
D)All of the above are considered productive activities

Question 30

Which document provides the descriptions and quantities of materials taken into production for a specified sale or other authorized production activity?

A)The routing slip
B)The shipping notice
C)The purchase requisition
D)The sales order

Question 31

The component of the logistics function that directs the focus of operations is referred to as:

A)Logistics
B)Planning
C)Reporting
D)Sales forecast

Question 32

The responsible for managing the placement and development of sufficient qualified personnel which includes hiring and training workers, as well as maintaining records of their performance, is the task of the:

A)Production schedule department
B)Production orders department
C)Maintenance and control department
D)Human re

Question 33

The process that plans the timing for production activities is referred to as:

A)Operations list
B)Bill of materials
C)Scheduling
D)Capital budgeting

Question 34

The process that is concerned with maintaining the capital resources used to support production is referred to as:

A)The production schedule
B)Production orders
C)Maintenance and control
D)The human re

Question 35

The issuance and movement of materials into the various production phases is referred to as:

A)Production scheduling process
B)Inventory control process
C)The routing process
D)The production orders process

Question 36

The responsibility for managing and recording the movement of inventory in the many different directions that it may go throughout the conversion process is assigned to the:

A)Production schedule department
B)Inventory control department
C)Maintenance and control department
D)Human re

Question 37

One inventory control function that is important to the conversion process is the determination of _______ _______ ______, or the most efficient quantity of products to purchase.

A)Economic purchase amount
B)Economic order quantities
C)Materials re
D)Re

Question 38

The ________ _________ function concerns the control of raw materials inventory held in storage or in holding areas, waiting for processing.

A)Raw materials
B)Inventory warehousing
C)Inventory stores
D)Quality control

Question 39

The form that specifies the components of a product, including descriptions and quantities of materials and parts needed is the:

A)Operations list
B)Bill of materials
C)Engineering
D)Capital budgeting

Question 40

Which of the following involves managing the holding area for finished goods awaiting sale?

A)Purchase orders
B)Shipping notices
C)Purchase requisitions
D)Inventory warehousing

Question 41

Routing is the:

A)Path electronic messages follow in the inventory system
B)Issuance and movement of materials into the various production phases
C)Physical movement of materials from the point of sale to the customer
D)Physical movement of materials from the vendor to the inventory stores facility

Question 42

The planning component of the logistics function has all of the following elements except:

A)Maintenance and control
B)Engineering
C)Scheduling
D)Capital budgeting

Question 43

Economic order quantity (EOQ) is a function:

A)Of the purchasing customer or client
B)Of the sales force to provide the purchasing customer or client with the greatest value
C)Of the responsibility of engineering through the operations list
D)As

Question 44

The responsibility to conduct make/buy decisions is usually given to:

A)Engineering
B)Capital budgeting
C)Operations
D)Research and development

Question 45

Production orders:

A)Outline the specific timing required for sales orders
B)Authorize production activities for a particular need or order
C)Are forecasts of needs based on known and anticipated sales
D)Are issued by the engineering department to correct product deficiency issues

Question 46

The term "operations" is commonly used to refer to:

A)The main function of the business
B)Any function of the business which generates revenues
C)Only those functions of the business accomplished by the operations department
D)Only those functions which move inventory through the production cycle

Question 47

A production schedule:

A)Does not contain requirements due to sales forecasts
B)Does not contain information from the bill of materials
C)Contains information from the operations list
D)Are issued by the maintenance and control department

Question 48

The resource management component of the logistics function has all of the following elements except:

A)Maintenance and control
B)Human re
C)Inventory control
D)Capital budgeting

Question 49

The bill of materials is the:

A)Cost of raw materials purchased from a vendor
B)Document of instructions utilized to assemble a product
C)Form that specifies the components of a product
D)Designing the product and creating the bill of materials and the operations list

Question 50

The major function within the conversion process is the:

A)Sales order function
B)Sales forecast function
C)Logistics function
D)Reporting function

Question 51

The operations list is the:

A)Schedule of production for the day, week, or month as specified by the company.
B)Document that includes each operation to be performed, including the location of the activity and re
C)Form that specifies the components of a product.
D)Outlines the design of the product and the creation of the bill of materials.

Question 52

Scheduling:

A)Plans the timing for acquisition of fixed assets
B)Does not take into account machine breakdowns
C)Takes into consideration all the open sales orders
D)Does not take inventory needs

Question 53

Select the true statement from the choices below.

A)Inventory stores and warehousing are both concerned with raw materials.
B)Neither inventory stores nor warehousing are concerned with raw materials.
C)Inventory stores is concerned with raw materials and warehousing is concerned with finished goods.
D)Inventory stores is concerned with finished goods and warehousing is concerned with raw materials.

Question 54

The operations component of the logistics function has which of the following elements?

A)Maintenance and control
B)Production
C)Inventory control
D)Capital budgeting

Question 55

Engineering is responsible for:

A)Designing the product while operations is responsible the bill of materials and the operations list
B)Designing the plant and equipment used in manufacturing
C)Is responsible for the procurement of production equipment
D)Designing the product and creating the bill of materials and the operations list

Question 56

All of the following are classifications of inventory EXCEPT:

A)Raw materials
B)Finished goods
C)
D)Work-in-process

Question 57

The component of the logistics function that directs the focus of operations is the:

A)Operations component
B)Re
C)Planning component
D)The sales component

Question 58

The department responsible for training production personnel is the:

A)Production department
B)Human re
C)Engineering department
D)None of the above

Question 59

Inventory status reports are:

A)Generated only for raw materials
B)Only generated for finished goods
C)Prepared at various stages of the production process
D)Only generated for work in process

Question 60

Capital budgeting:

A)Is responsible for the issuance of stocks and bonds to finance operations
B)Plans the capital re
C)Is responsible for the procurement of production materials
D)Is not a function of a company once established and functioning

Question 61

In inventory systems, when the actual quantity and the accounting records quantity are compared it is referred to as:

A)Perpetual inventory
B)Inventory re
C)The physical inventory reconciliation
D)Periodic inventory

Question 62

Rework refers to:

A)Generating a better quote for a customer
B)Overhaul of a manufacturing machine
C)Additional procedures to bring a product up to specifications
D)Parts that are beyond repair at any cost

Question 63

Perpetual inventory systems:

A)Record changes in inventory categories only at the end of each period
B)Record changes in inventory categories only when sales are made
C)Record changes in inventory categories whenever material is moved from one category to another
D)Does not address raw materials

Question 64

The expected cost based on projections of a product's required resources which includes direct materials, direct labor and overhead is referred to as:

A)Quality control costs
B)Sales order cost
C)Rework costs
D)Standard costs

Question 65

Which of the following correctly lists activities within the conversion process in chronological order?

A)Prepare bill of materials, initiate production, inspect goods, prepare purchase requisition
B)Prepare purchase requisition, prepare bill of materials, initiate production, inspect goods
C)Inspect goods, prepare bill of materials, initiate production, prepare purchase requisition
D)Prepare bill of materials, prepare purchase requisition, initiate production, inspect goods

Question 66

Perpetual inventory systems:

A)Are only updated at the end of each fiscal period
B)Are concerned only with finished goods
C)Are not concerned with raw materials
D)Involve every level of inventory necessary for production

Question 67

Variances represent the differences between:

A)Actual costs and the standard costs applied
B)Raw materials ordered and raw materials received
C)The sales targets and sales accomplishments
D)Actual quantity on hand and quantity according to the inventory system

Question 68

Standard costs are the:

A)Responsibility of production accountants
B)Expected costs based on required re
C)Costs normally paid for a component
D)Prices the customer is expected to pay upon sale

Question 69

Operations may be performed by all of the following except:

A)Continuous processing of homogeneous products
B)Batch processing
C)Custom, made-to-order processing
D)Each of the above is a valid form of operations

Question 70

The final hub in the logistics function is:

A)Packaging
B)Quality control
C)Sales
D)Shipping to the customer

Question 71

The final hub in the logistics function which involves a follow-up to production, where the products are inspected before they are moved to the warehouse or shipping area is referred to as:

A)Quality control
B)Shipping notice
C)Purchase requisition
D)Warehousing

Question 72

Security of assets and documents include all of the following except:

A)Water sprinklers
B)Adequate insurance coverage
C)Restricted movement of office supplies
D)Security guards

Question 73

A system which involves recording purchases of raw materials inventory, recording all the components of work in process, and recording the total cost of sales for products completed and sold is referred to as:

A)A perpetual inventory system
B)The accounting information system
C)A periodic inventory system
D)None of the above

Question 74

Periodic inventory systems:

A)Are only updated at the end of each fiscal period
B)Are concerned only with finished goods
C)Are not concerned with raw materials
D)May not reflect current inventory levels

Question 75

Variances:

A)Represent the differences between actual costs and the standard costs applied
B)Represent the difference between design specifications and production results
C)Represent flaws in the production results
D)Each of the answers is correct.

Question 76

Which of the following activities in the conversion process does NOT require express authorization?

A)Initiation of production orders
B)Issuance of materials into the production process
C)Transfer of finished goods to the warehouse or shipping areas
D)Initiation of a sales order

Question 77

Variances:

A)Are only investigated if they are unfavorable
B)Are always investigated
C)Will always result in the improvement of the logistics function
D)Understanding the cause of both favorable and unfavorable variances can be important

Question 78

Segregation of duties is accomplished by which of the following?

A)Accounting per
B)Warehouse per
C)Production per
D)None of the above

Question 79

Standard costs take into consideration all of the following except:

A)The cost of materials utilized to maintain production equipment
B)The cost of labor used to operate the production machinery
C)The cost of the sales manager's salary
D)Factory overhead items that cannot be directly correlated to product production

Question 80

Which of the following is NOT a responsibility given to the individuals making purchases for the company?

A)Purchasing raw materials for production
B)Specifying the order and sequence of payments to vendors
C)Selecting vendors
D)Specifying the quantities to be ordered