Test bank accounting information system by turner 11 chapter

To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com ACCOUNTING INFORMATION SYSTEMS CONTROLS AND PROCESSES TURNER / WEICKGENANNT CHAPTER 11: Conversion Processes and Controls TEST BANK – CHAPTER 11– TRUE / FALSE Because of the manpower and computer programmers required to control robotics, robotics has had little influence manufacturing Resources required in the conversion process include materials, labor, overhead, and fixed assets Even if a firm is a service or sales firm it may conduct some sort of manufacturing operation The major function within the conversion process is the logistics function The three primary components of the logistics function are 1) planning, 2) production, and 3) sales The research and development effort is part of the planning process rather than the operations process A bill of materials lists both physical items and skill requirements needed to construct an item of inventory Maintenance and control is concerned with maintaining the capital resources used to support production, including production facilities and other fixed assets Routing is the issuance and movement of materials through the sales process 10 Inventory warehousing involves managing the holding area for finished goods awaiting sale 11 The final hub in the logistics function is sales 12 Standard costs are expected costs based on projections of a product’s required resources 13 Standard costs include direct materials, direct labor, and overhead 14 Perpetual inventory systems involve updating the inventory and cost of sales accounts only at the end of the period 15 Because conversion processes involve the physical movement of inventory throughout the operating facility and these movements are normally accomplished by material handling personnel the burden of sufficient internal controls is not required 16 Complete, up-to-date, and accurate documentation on production orders is needed to support the conversion process To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 17 Physical controls should be in place in the company’s storerooms, warehouses, and production facilities in order to safeguard the inventories held therein 18 When perpetual inventory concepts are utilized, a physical inventory count to determine the quantity of inventory on hand is not required 19 To ensure that delays and shutdowns in one part of the manufacturing facility not affect another part of the manufacturing facility IT integration of all or part of the company’s processing applications is usually not accomplished 20 Computer-aided manufacturing (CAM) involves the complete automation of the production process, including the full replacement of human resources with computers 21 MRP stands for Management Resource Projections 22 Just-in-time (JIT) production systems are concerned with minimizing or eliminating inventory levels of all inventory items 23 Earnings management is the act of misstating financial information in order to improve financial statement results 24 Absorption costing involves the inclusion of both variable and fixed costs in the determination of unit costs for ending inventories and cost of goods sold 25 Management should not consider the moral implications of replacing human resources with electronic resources based on the cost/benefit concept 26 The systems, processes, and internal controls are part of a corporate governance structure 27 Corporate governance requires proper financial stewardship, and since inventories, fixed assets, and office supplies are the largest assets reported on a balance sheet, financial stewardship in these areas is especially important ANSWERS TO TEST BANK - CHAPTER 11 - TRUE/FALSE: F F T T F T 10 11 12 F T F T F T 13 14 15 16 17 18 T F F T T F 19 20 21 22 23 24 F T F T T T 25 F 26 T 27 F To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com TEST BANK – CHAPTER 11 – MULTIPLE CHOICE 28 A company’s conversion processes includes all of the following except: A materials B office supplies C labor D overhead 29 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 30 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 31 Overhead includes all of the following except: A various other expenses necessary to run the operating facility B the president’s salary C fixed assets D indirect labor and materials 32 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 and preparing the related cost accounting and financial accounting records 33 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, A, B, and C, are considered productive activities 34 The process of logical, systematic flow of resources throughout the organization is referred to as: A logistics B planning C reporting D sales forecast To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 35 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 36 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 37 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 38 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 39 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 resources process 40 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 resources process 41 A _ 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 resources schedule To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 42 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: A the production schedule department B the production orders department C the maintenance and control department D the human resources department 43 The responsible 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 the human resources department 44 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 45 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 46 Inventory _ managing the holding area for finished goods awaiting sale A purchase order B shipping notice C purchase requisition D warehousing 47 The major function within the conversion process is the: A sales order function B sales forecast function C logistics function D reporting function 48 The component of the logistics function that directs the focus of operations is the: A operations component B resource management component C planning component D the sales component To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 49 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 50 The resource management component of the logistics function has all of the following elements except: A maintenance and control B human resources C inventory control D capital budgeting 51 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 52 The responsibility to conduct make/buy decisions is usually given to: A engineering B capital budgeting C operations D research and development 53 Capital A B C D budgeting: is responsible for the issuance of stocks and bonds to finance operations plans the capital resources needed to support operations is responsible for the procurement of production materials is not a function of a company once established and functioning 54 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 55 The bill A B C D of materials is the: cost of raw materials purchased from a vendor document of instructions utilized to assemble a product form that specifies the components of a product designing the product and creating the bill of materials and the operations list 56 The operations list is the: A schedule of production for the day, week, or month as specified by the company 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 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 57 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 58 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 59 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 60 The department responsible for training production personnel is the: A production department B human resources department C engineering department D None of the above 61 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 associated with inventory control 62 Routing is: A the B the C the D the path electronic messages follow in the inventory system issuance and movement of materials into the various production phases physical movement of materials from the point of sale to the customer physical movement of materials from the vendor to the inventory stores facility 63 Inventory status reports: A: are generated only for raw materials B are only generated for finished goods C are prepared at various stages of the production process D are only generated for work in process 64 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 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 65 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 66 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 67 The final hub in the logistics function is: A: packaging B: quality control C sales D shipping to the customer 68 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 69 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 70 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 71 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 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 72 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 73 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 74 Standard costs are: A the responsibility of production accountants B the expected costs based on required resources C the costs normally paid for a component D are the prices the customer is expected to pay upon sale 75 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 76 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 77 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 78 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, A, B, and C are correct 79 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 may not result in any changes in the logistics function To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 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 81 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 82 Segregation of duties is accomplished by which of the following? A Accounting personnel having restricted access to physical inventory B Warehouse personnel signing all documents related to material movements C Production personnel restricted to one manufacturing station at all times D None of the above 83 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 84 In inventory systems, when the actual quantity and the accounting records quantity are compared it is referred to as: A perpetual inventory B inventory resolution C the physical inventory reconciliation D periodic inventory 85 Cost-benefit can be defined as: A Gross profit after sales are made B cameras and security guards to protect construction materials in a restricted access warehouse C verifying inventory levels at the end of each working shift D alarm systems and vaults for fine jewelry inventories 86 The activity in the conversion process that does not require express authorization is: A the initiation of production orders B the issuance of materials into the production process C the transfer of finished goods to the warehouse or shipping areas D the movement of production pieces from one stage of production to the next To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 87 Within A B C the logistics function, segregation of duties means: one person should not have both inventory and accounting responsibilities one person should not have production responsibilities over more than one station one person should not have quality assurance responsibilities over a work station other than his own D each person can only have one duty or function in the production function 88 Physical controls include all but: A fences and alarm systems B security guards C high tech security tools D Each of the answers, A, B, and C are correct 89 Physical inventory counts should only include: A finished goods B finished goods and raw materials C finished goods and work-in-process D raw materials, work-in-process, and finished goods 90 When there is a difference between the inventory records quantity and the physical count of inventory: A there is a variance B the difference can be ignored if minor C the difference is resolved through inventory reconciliation D the difference is ignored if the physical quantity exceeds inventory record quantity 91 Which of the following factors does not influence the need to safeguard and monitor inventory movement? A Inconsistent or high levels of inventory movement B If the inventory is held at various locations C If a company’s inventory items are difficult to differentiate D Each of the answers, A, B, and C are correct 92 The software allows engineers to work with advanced graphics at electronic work stations to create 3-D models that depict the production environment A computer-integrated manufacturing systems (CIMs) B computer aided design (CAD) C material resource planning (MRP) D computer aided manufacturing (CAM) 93 _ involves the automated scheduling of production orders and movement of materials in the production process A Computer-integrated manufacturing systems (CIMs) B Computer aided design (CAD) C Material resource planning (MRP) D Computer aided manufacturing (CAM) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 94 _ integrates all of the conversion processes to allow for minimal disruptions due to reporting requirements or inventory movement issues A Computer-integrated manufacturing systems (CIMs) B Computer aided design (CAD) C Material resource planning (MRP) D Computer aided manufacturing (CAM) 95 IT systems permit or allow all of the following except: A automatic computation of materials requirements based on sales orders B reduced internal security measures C automatic updating of inventory status reports D timely transfer of inventories throughout the process, 96 Computerization of the conversion process results in all except: A Automatic computation of materials requirements based on purchase orders B Timely transfer of inventories throughout the process C Automatic updating of inventory status reports D Automatic computation of materials requirements based on sales orders 97 Select the false completion to the statement which starts “A computer-based conversion process:” A requires less data input into the system B automatically prepares financial accounting entries and cost accounting reports C yields greater benefits in terms of workforce efficiency D permits more systematic scheduling which allows for greater flexibility 98 Select the true statement A Computer-aided manufacturing (CAM) requires computer-aided design B Computer-aided design is always two dimensional C Computer-aided design may be three dimensional D Computer-aided design requires additional manpower during assembly 99 Just-in-time (JIT) production systems: A require close communications with the engineering department B not require close communications with vendors C require closely controlled inventory levels D not require additional monitoring 100 The act of misstating financial information in order to improve financial statement results is referred to as: A just in time production systems B manufacturing resource planning C earning management D absorption costing To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 101 _ involves the inclusion of both variable and fixed costs in the determination of unit costs for ending inventories and cost of goods sold A Just in time production systems B Manufacturing resource planning C Earning management D Absorption costing 102 Ethical issues of manufacturing include all except: A reassignment or retraining vice termination due to automation B absorption costing C production of excessive inventory levels D earnings management 103 Absorption costing requires: A production inefficiencies to be immediately identified B production to absorb the cost of waste and yield factors not considered in other costing methods C includes both variable and fixed costs in unit costs D the transfer of values to the income statement through inventory accounts 104 Earnings management: A is the act of misstating financial information B is the goal of cost/benefit relationships C accomplished through the proper management of inventory and sales D is an ethical goal of management 105 Manpower displacement through automation: A is considered a benefit through cost/benefit analysis B should be a concern of management C is the goal of proper engineering D seldom results in termination of employees 106 Corporate governance requires all of the following except a/an: A system B process C product D internal control system 107 When A B C D the proper tone of corporate governance is in place: encouraging ethical conduct is unnecessary effectiveness is not improved risk of fraud tends to increase proper stewardship of assets increases To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com ANSWERS TO TEST BANK - CHAPTER 11 - MULTIPLE CHOICE: 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 B B C B A D A B B A C B C A D B 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 C A D C C A D B D B D D C C B C 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 B D B C C A D B C A D A C A B C 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 D D A D B D A C C D D A D D C D 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 B C A B A A C C C D B C A B C D To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com TEST BANK - CHAPTER 11 – END OF CHAPTER QUESTIONS: 108 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 109 The A B C D term conversion processes is often used synonymously with operations production manufacturing All of the above 110 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 resource management D Scheduling 111 Which of the following activities is an inventory control activity? A Engineering B Maintenance C Routing D Quality control 112 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 113 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 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 114 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 someone who is independent of the cash disbursements function? 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? 115 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 116 A firm expects to sell 1000 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 117 Which of the following internal controls is typically associated with the maintenance of accurate inventory records? A Performing regular comparisons of perpetual records with recent costs of inventory items 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 118 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 119 The A B C D goal of a physical inventory reconciliation is to determine the quantity of inventory sold compare the physical count with the perpetual records compare the physical count with the periodic records determine the quantity of inventory in process To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 120 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 121 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 resource planning (MRP) C First-in, first-out (FIFO) D Just-in-time (JIT) 122 For which of the following computerized conversion systems is Wal-Mart well known? A CAD/CAM B MRP-II C CIMs D JIT ANSWERS TO TEST BANK - CHAPTER 11 – END OF CHAPTER QUESTIONS: 108 D 109 D 110 C 111 C 112 A 113 C 114 C 115 A 116 C 117 D 118 C 119 B 120 B 121 D 122 D TEST BANK - CHAPTER 11 - SHORT ANSWER QUESTIONS 123 What are the three resources that an organization must have to conduct a conversion (or transformation) process? Answer: The three resources are materials, labor, and overhead 124 Do conversion processes occur in manufacturing companies only? Why or why not? Answer: All companies have a conversion process That is, all companies use resources to provide an output for customers Even in the case of service companies, or non-profit organizations, there are conversion processes Manufacturing companies typically have more complex conversion processes 125 Why are conversion activities typically considered routine data processes? Answer: Within conversion processes, there are daily, routine processes that occur For example, laborers may assemble parts every day Since these processes occur daily, and repetitively, they are routine 126 Differentiate between a bill of materials and an operations list Answer: The bill of materials is a list of materials and components that are ingredients to manufacture a particular product The operations list is the set of steps or operations, in the necessary sequence, to manufacture a product The operations list includes the locations, resources, and standard timings To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 127 Differentiate between the roles of the engineering and the research and development departments Answer: Research and development focuses on improvement of products or product lines It is intended to develop new products, or improvements to existing products Engineering designs the detailed specifications for each product to be manufactured Research and development would have a more future focus that engineering 128 What are the two types of documents or reports are likely to trigger the conversion process? Answer: A sales order or a sales forecast would trigger the conversion process Manufacturing would not be started until a need for products was documented on either a sales order or sales forecast 129 What are the three primary components of logistics? Answer: They are planning, resource management, and operations Planning is concerned with which products will be made, how many of each of these products, which resources are required, and the timing of production Resource management is the monitoring and controlling of the use of resources such as the facilities, human resources, and inventory Operations is the day-to-day performance of production activities 130 What types of information must be taken into consideration when scheduling production? Answer: The information that should be considered includes all open sales orders, inventory needs, and resources available 131 Differentiate between a routing slip and an inventory status report Answer: A routing slip documents materials removed from the storeroom and placed into production An inventory status report documents the extent of work completed and the levels of inventory at the various stages of completion 132 What are the conversion responsibilities of the maintenance and control, inventory control, inventory stores, and human resources departments? Answer: Maintenance and control maintains the fixed assets such as production facilities, machinery, equipment, and vehicles Inventory control manages and records the movement of materials and inventory Inventory stores controls the raw materials held in storage that will eventually be used to produce goods 133 What is the purpose of an inventory status report? Answer: An inventory status report documents the extent of work completed and the levels of inventory at the various stages of completion 134 What is the overall goal of the inventory control department? Answer: Its purpose is to manage and record the movement of materials and inventory throughout the production process 135 What is the purpose of the quality control department? Answer: The purpose is to inspect products and to allow products that meet quality standards to be moved to a warehouse or shipping area Products that not meet quality standards are returned to production for rework or they are scrapped To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 136 What is the purpose of determining standard costs? Answer: Standard costs are used as benchmarks of comparison for actual costs Comparing actual costs to standard costs allows managers to determine whether excessive resources are being used in production 137 What should be done when unfavorable variances are discovered? Answer: These differences (variances) help pinpoint problem areas in production Since unfavorable variances result from actual costs that exceed standard costs, they may indicate that excessive resources are being used in production This information could be used to improve logistics in the conversion processes 138 Why would perpetual inventory records be preferable to periodic inventory records in a manufacturing company? Answer: With perpetual inventory records, management always has up-to-date information about inventory levels Having such information improves the ability to plan production schedules and to plan purchases of material 139 Which three activities in the conversion process should require specific authorization before they are begun? Answer: The three processes that should require specific authorization are: initiation of production orders; issuance of materials to production; and transfer of finished goods 140 Why is it important to separate the functions of inventory control and the production stations? What could go wrong if these functions were not separated? Answer: Inventory control maintains records of inventory, while production stations have custody of materials during production Custody duties and recording duties for raw materials and good being produced should always be segregated If these duties are not segregated, one person has both custody and record keeping duties That person could steal materials or goods and alter records to cover up the theft 141 Why is it so important that variance reports be prepared in a timely manner? Answer: Variances serve as independent checks on the accuracy and completeness of production costs They also indicate to management where changes may need to be made to improve the production processes If variances are not examined on a timely basis, they are much less effective in serving the functions of independent checks 142 Explain how a physical inventory count would differ in a company using a perpetual inventory system versus one using a period inventory system Answer: In a perpetual inventory system, a physical inventory count is used to verify the accuracy of inventory records If a difference exists between the inventory balances and a physical count, perpetual inventory records are adjusted to ensure that the recorded balances equal the physical count In a periodic system of inventory, there is no ending balance in the records and the physical count is used to determine the balance to place in the inventory control records To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 143 When IT systems are used in conversion processes, what are some of the resulting advantages to the organization? Answer: There are often gains in productivity and flexibility, with reductions in time and cost Also, IT systems often integrate processing applications, planning, resource management, operations, and cost accounting This increases workforce efficiency and reduces paperwork and costs 144 How can programmed controls within the IT system for conversion processes enhance internal controls? Answer: There are several ways that programmed controls enhance internal control First, validation of data can detect input errors before actions are initiated Also, the system may be programmed to issue error reports for errors or unauthorized events in production As examples, the system could issue error reports if a work-in-process record is not generated for a production order, or if the same operation is performed at multiple work stations, or when an employee performs incompatible operations 145 What is the difference between CAD, CAM, and CIM? Answer: CAD is computer aided design By using the computer in the design process, it becomes more effective and efficient CAM is computer aided manufacturing It usually involves computer controlled robotics to perform production procedures CIM is computer integrated manufacturing It encompasses more than CAM because it integrates financial and cost accounting, along with computer controlled manufacturing That is, the computer controls robotic manufacturing, and also captures, records, and maintains accounting information about production processes 146 What is the difference between MRP, MRP-II, and ERP? Answer: All three are software systems MRP is materials requirement planning and it is used to plan, coordinate and track materials in a manufacturing process MRP II is manufacturing resources planning software An AMR II system is more comprehensive and includes the ability to plan, coordinate, and track manufacturing resources This would include materials, labor, and facilities ERP is enterprise resource planning system It is software that helps plan, coordinate, and track all enterprise resources Thus ERP is more encompassing than MRP II, and MRP II is more encompassing than MRP 147 How can conversion processes be manipulated to show higher earnings? Answer: Cost accounting uses absorption costing in which fixed overhead is applied to units produced When excess units are produced, these excess units become part of ending inventory, and the fixed overhead attached to those units is set aside in ending inventory Therefore, as more units are added to ending inventory, more fixed overhead is deferred and net income becomes higher Income can be manipulated by producing more units than needed and putting those units in ending inventory To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com TEST BANK - CHAPTER 11 - SHORT ESSAY 148 Consider a company that is in the business of producing canned fruits for grocery stores (It is not in the business of growing the fruit.) List the items that would likely be included as this company’s direct materials, direct labor, indirect materials, and other overhead Answer: The direct materials would be many different kinds of fruits such as pineapple, peaches, grapes, cherries, pears, and mandarin oranges The direct materials could also include sugar or fructose The indirect materials might be water Direct labor would be those workers that work directly in the cleaning, peeling, slicing, and packaging of the fruit Even if these processes are automated, rather than manual, the workers who operate the slicing or packaging machinery are direct labor Other overhead includes other costs of running the canning operation that are not direct materials or direct labor This could include utilities, rent, depreciation, machine maintenance, and supplies 149 Give some examples of manufacturing processes that would fit into each of the three different types of production processes: continuous processing, batch processing, and custom made-toorder Answer: Continuous processing examples: Soft drink bottling, beer bottling, frozen meal processing (Lean Cuisine, Banquet), cereal, toy making such as dolls, electronics manufacturing such as i-pods, power generation as in coal-fired plants Examples of batch manufacturing might be: wine making, gasoline production, prescription pill production Many things that could be continuous production might also be made in batches for convenience or efficient use of machinery For example, equipment to bottle soft drinks might be used for a few hours to bottle a batch of Pepsi, then be cleaned and set to produce a batch of Mountain Dew Examples of custom, made-to-order manufacturing would include consumer products identified as customized For example, BeyondBikes.com makes custom mountain bikes using specific parts chosen by the customer Also, many companies make custom manufactured products for other companies Examples would include specially machined parts or components, custom made manufacturing machinery or tools, and print shops that print custom made printed material 150 List and describe each activity within the planning component of the logistics function Answer: Planning includes: research and development, capital budgeting, engineering, and scheduling Research and development is the design of new products, or the redesign of existing products to improve the existing products Capital budgeting is the planning needed in the outlay of funds to acquire capital assets Capital assets include the facilities and equipment needed to conduct operations Engineering develops the product specifications for each product, to include the bill of materials and the operations list Scheduling sets the timing for production activities Scheduling should minimize idle time and schedule products to meet the demands of the sales forecast or inventory needs To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 151 Some companies use the same facility for both inventory stores and warehousing Describe the difference between these two inventory control activities, and how the respective areas might be distinguished within the facility Answer: Inventory stores usually is the term used for raw materials or components used as inputs to manufacture products A warehouse is the storage location for finished products Thus, inventory stores is the storage for inputs, while the warehouse is storage for the out puts Since both are physical storage locations for manufacturing facilities, they have common needs for security and physical controls, as well as proper and accurate record keeping 152 For the following activities within the conversion process, place them in sequence that indicates the order in which they would normally be performed: • Inspection of goods • Materials issuance • Preparation of time sheets • Preparation of a bill of materials • Preparation of an inventory status report • Preparation of a production schedule Answer: Preparation of a production schedule Preparation of a bill of materials Materials issuance Preparation of time sheets Inspection of goods Preparation of an inventory status report 153 Describe the purpose of each of the following cost accounting records or reports: • Work-in-process and finished goods inventory accounts Answer: Both are inventory accounts to track the amount of goods in process and the quantity of completed goods respectively • Bill of materials Answer: It specifies the quantities needed of each raw material or component to manufacture a particular product • Variance reports Answer: Variance reports show differences between actual costs and standard costs (expected costs) These reports are used to pinpoint problem areas that may require logistics changes to improve the manufacturing process • Routing slips Answer: The routing slip is used to document the movement of material This tracks the physical movement of materials in the conversion process To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 154 Describe how a cost accountant would cancel a production order upon completion of the related product Why is this important? Answer: The documentation for the order, called the production order, should be marked in a manner to show it is complete For example, a cost accountant might sign a particular line to show it is completed, or stamp the production order with the word “Completed” This cancelling of the document is important so that the exact status of the order is clear and so that the document may not be misused to commit fraud For example, a production order not cancelled could be used to fraudulently begin a new production run so that the products could be stolen 155 When taking a physical inventory count at a typical manufacturing facility, which category of inventory (raw materials, work-in-process, or finished goods) is likely to be the most time consuming to count and determine the relevant costs for? Why? Answer: Work-in-process is likely to be the most time consuming This is because the work-inprocess includes all units in production at various stages of completion and these units could be located at many different work stations or work centers Tracking the location, quantity, and stage of completion for each work-in-process unit would be more complex than tracking units of raw materials or finished goods 156 Identify several factors that indicate the need for more extensive internal controls covering conversion processes Answer: The factors include: the number of products made; the value or size of products (valuable or small products are more likely to be stolen), high levels of inventory movement, inventory held at various locations, and inventories that are difficult to value To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 157 Match the IT systems on the left with their definitions on the right: • CAD Answer: B Electronic workstation including advanced graphics and 3-D modeling of production processes • CAM Answer: G Production automation, including use of computers and robotics • MRP Answer: F Automated scheduling of production orders and materials movement • MRP-II Answer: C Automated scheduling of manufacturing resources, including scheduling, capacity, and forecasting functions • ERP Answer: E A single software system that includes all manufacturing and related accounting applications • CIMs Answer: A A network including production equipment, computer terminals, and accounting systems • JIT Answer: D The minimization of inventory levels by the control of production so that products are produced on a tight schedule in time for their sale TEST BANK - CHAPTER 11 - PROBLEMS 158 159 Question not available Question not available 160 Using an Internet search engine, search for the terms “CAD” _“industrial robots.” Identify a company (name and location) that provides manufacturing automation by using robotics Describe some of the robotic operations that are featured on the company’s website Answer: FANUC Robotics America is the leading supplier of robotic automation in the US They provide robotics for assembly, packing, parts transfer, material removal, welding, and painting There are too many robotics to explain each, but as an example, FANUC sells a P-10 door opener that is a vertically articulated robot designed specifically for opening automobile and truck doors to facilitate robotic interior painting There are other companies that provide industrial robots, including KUKA, Epson Robotics, Fischerteknic, Denso, and Motoman There are many other companies and a student might find names other than these 161 Question not available To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 162 Explain how the over-production of inventories can be seen as unethical in an absorption costing environment Answer: In absorption costing, fixed overhead is allocated to each unit of inventory Thus, overproduction that leads to increased levels of finished goods inventory results in more fixed overhead in the ending inventory valuations A higher ending inventory valuation leads to lower cost of goods sold and thereby, higher net income If the only purpose for this overproduction is to manipulate net income, it is unethical because it misleads those who use the financial statements 163 Price discounts are commonly used in the business world as incentives for customers How may this practice (or its misuse) be deemed unethical? Answer: If it is used as a coercive tactic to lure customers into purchasing early and therefore increasing profit in a given year, it can be unethical This is true if the major intent is to inflate profits Certainly, there are legitimate reasons to grant discounts, but it becomes unethical when the intent is to use discounts to inflate sales 164 Question not available  ... conversion systems is Wal-Mart well known? A CAD/CAM B MRP-II C CIMs D JIT ANSWERS TO TEST BANK - CHAPTER 11 – END OF CHAPTER QUESTIONS: 108 D 109 D 110 C 111 C 112 A 113 C 114 C 115 A 116 C 117 D 118 ... A B C D To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com TEST BANK - CHAPTER 11 – END OF CHAPTER QUESTIONS: 108 Manufacturing has changed in recent... A a perpetual inventory system B the accounting information system C a periodic inventory system D None of the above To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com