Question 1

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

Accepted Answer

Activity-based costing specifically identifies costs that are associated with the corporation's strategy for production of goods and services. This method allocates indirect costs to activities, which are then allocated to specific products or services based on their use of the activities. It provides a more accurate picture of the costs associated with each product or service, based on the actual resources consumed, and is therefore more suited to a strategic approach. Job-order costing and process costing are more appropriate for specific types of production processes, and manufacturing costing is a more general term that can refer to any approach to costing in a manufacturing context.

Question 2

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?

Accepted Answer

Using a volume-driven base, such as direct labor or machine hours, assumes that all overhead costs vary directly with production volume. However, many overhead costs are fixed, and do not vary with production volume. Therefore, using such a measurement results in many overhead costs being incorrectly allocated to products.

Question 3

What is a RFP and how can management use it to improve its production operations?

Accepted Answer

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Question 4

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

Accepted Answer

Detailed data about reasons for warranty and repair costs can help identify any design flaws or defects in the product, allowing corrective actions to be taken to improve the product quality, and prevent further warranty claims and repair costs. This can mitigate the threat of poor product design.

Question 5

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

Accepted Answer

Prevention costs are incurred to ensure that products are created without defects the first time. These costs are associated with activities that prevent defects from occurring, such as training and educating employees, implementing quality control processes, and using high-quality materials and equipment.

Question 6

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

Accepted Answer

Inspection costs are associated with testing to ensure that products meet quality standards. External failure costs occur after the product has been shipped and result in a loss of customers, while internal failure costs occur within the production process and result in rework or scrap. Prevention costs are associated with preventing defects from occurring in the first place.

Question 7

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

Accepted Answer

The AIS should not maintain the market value of fixed assets as it may fluctuate over time and is not relevant to the accounting for fixed assets. The other options, such as identification/serial number, cost, and improvements, are important in maintaining an accurate record of fixed assets.

Question 8

MRP-II is to MRP,as lean manufacturing is to

Accepted Answer

MRP-II builds upon MRP by also integrating resources planning, scheduling, and capacity planning. Similarly, lean manufacturing builds upon JIT by also aiming to eliminate waste, increase efficiency, and improve overall productivity. EOQ, reorder point, and push manufacturing are all related to inventory management but do not directly relate to lean manufacturing.

Question 9

The VP of Manufacturing at Roshanak Incorporated wants to buy a new die cast machine for production.The die cast machine is expected to cost around $1,000,000.Which document will most likely be used to solicit bids from suppliers?

Accepted Answer

The document that is commonly used to solicit bids from suppliers is the Request for Proposal (RFP). It is a document that outlines the project requirements, specifications, and deadlines, and invites potential suppliers to submit their proposals. The RFP is used when the company needs intricate product solutions, where the company aims to evaluate the solutions from multiple vendors, and where the pricing isn't the primary driver.

Question 10

The acronym "RFP" stands for what?

Accepted Answer

RFP stands for Request for Proposal, which is a formal documented request to potential suppliers to submit proposals meeting the client's requirements for the provision of goods or services.

Question 11

Explain what CIM means and its benefits.

Accepted Answer

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Question 12

Maintaining physical custody of the raw materials and finished goods inventories is the responsibility
of the accounting department.

Accepted Answer

The responsibility of maintaining physical custody of raw materials and finished goods inventories typically falls on operations or logistics teams, not the accounting department. The accounting department is more involved in tracking inventory levels and cost accounting.

Question 13

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

Accepted Answer

Computer-integrated manufacturing refers to the use of various forms of technology in the production process, including computer control of machines and equipment, automated material handling, and computer-aided design and manufacturing. This integration allows for increased efficiency, faster production times, and better quality control. Choices A, B, and D do not accurately describe the use of technology in the production process.

Question 14

Identify and discuss the two common methods of production planning.

Accepted Answer

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Question 15

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

Accepted Answer

Adequate insurance coverage is important for an organization to ensure that they are able to replace any inventories or assets that may be destroyed by a fire or other disaster. Stand-by facilities and source data automation may also be helpful, but they are not as essential as having adequate insurance coverage.

Question 16

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

Accepted Answer

The use of robots and computer-controlled machinery to shift from mass production to custom order manufacturing is a characteristic of computer-integrated manufacturing (CIM). Lean manufacturing focuses on minimizing waste while Six Sigma focuses on reducing defects and improving quality. Computer-aided design (CAD) is a tool used for designing products using computer software.

Question 17

Which process or activity relates to overproduction?

Accepted Answer

Planning and scheduling directly relate to overproduction because improper planning and scheduling can lead to producing more goods than demanded, resulting in excess inventory.

Question 18

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

Accepted Answer

The first term in the throughput formula, productive capacity, represents the maximum number of units that can be produced given current technology. This refers to the total potential output of a process, assuming all resources are fully utilized and there are no interruptions or downtime.

Question 19

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

Accepted Answer

Providing tests of audit control functions as part of the AIS is not a cost accounting objective for the production cycle. The other objectives listed (A, B, and C) are cost accounting objectives for the production cycle.

Question 20

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

Accepted Answer

A cause-and-effect relationship in ABC is known as a cost driver, as it is the activity or factor that directly causes a change in the cost incurred. It helps allocate overhead costs more accurately to products or services based on their actual usage of resources. A cost stimulator or catalyst would not accurately reflect the concept of a cause-and-effect relationship in ABC.

Quiz 14: The Production Cycle