Accounting Information Systems, 11e (Bodnar/Hopwood)
Chapter 10 The Production Business Process
1) Costs in job or processing costing may be either actual or standard costs.
2) Detailed material specifications for a product are recorded on a bill-of-materials.
3) Factor availability reports communicate the availability of labor and machine resources for
use in production.
4) Sales forecasts are generally unrelated to the amount of a product held in inventory.
5) An important internal control function is the reconciliation of time cards to production labor
reports.
6) Reorder point is calculated as the purchasing cost per order multiplied by the average
inventory usage rate.
7) The best sources of information necessary to calculate an EOQ are prior purchase orders.
8) The perpetual inventory method is a term used to describe a system in which parts are
produced only as they are required in subsequent operations.
9) Fixed assets are often the company’s largest investment.
10) Automated drafting software is part of a CAM system.
11) Industrial robots are used to move material, parts, tools, or specialized devices through
variable programmed motions for the performance of a variety of tasks.
12) CAM systems are used to collect and process data from programmable manufacturing
processes to provide decision support.
13) Systems that incorporate programmable production processes that can be quickly
reconfigured to produce different types of products are called ZIPS.
14) FMS greatly speeds up time-consuming retooling.
15) The “heart” of the MRP II system is the MRP system.
16) The value of a typical EDI system is that vendor and customer are linked electronically.
17) Bar code is an automatic identification technology that uses low power radio waves to send
and receive data between RFID tags and readers.
18) A finished goods status report is sent to production planning from the stores department.
19) The master-operations file is one of the data sources integrated with others in the production-
planning application program.
20) The central feature of the cost accounting application is updating of the production-loading
file.
21) The cost accounting application program processes the production data and production-status
files.
22) Outputs of a cost accounting program are job time and machine time tickets.
23) The term applied overhead refers to the element of direct labor hours or cost used in the CIM
environment.
24) Activity-based costing calculates a single overhead rate for each different manufacturing
activity.
25) Production volume is one way to measure a cost driver.
26) The significance of activity-based costing as a management tools depends largely on the
accuracy of the cost drivers selected as allocation bases.
27) The MRP II systems extends MRP in production order processing by including the creation
of transaction files and numerical control tapes for the plant floor.
28) There are seven major processing modules in MRP II.
29) In MRP II, batch size is determined from the production-planning module.
30) As a manufacturer moves from a batch to at JIT continuous flow manufacturing
environment, more emphasis may be placed on an MRP II system.
31) Lean production is a concept based on the concept that inventory is a waste.
32) Lean production is an inventory system in which parts are stored when there is evidence of a
stock out.
33) Lean production is a production system in which parts are produced only as they are required
in subsequent operations.
34) RFID stands for radio-frequency inventory documentation.
35) Radio-frequency identification is an automatic identification technology that uses low power
radio waves to send and receive data between RFID tags and readers.
36) RFID tagging is more popular than bar coding in inventory management systems because
they are cheaper and have a lower error rate.
37) EAN-13 is a bar coding standard which is a superset of the original 12-digit UPC system.
38) GS1 is a global organization dedicated to the design and implementation of global standards
and which is the creator of EAN-13.
39) GTIN is the Global Trade Item Number which is an identifier for trade items developed by
GS1.
40) A GTIN can be 8-14 digits long and can be constructed using several number structures.
41) The procedure in which costs are compiled in process or department accounts by periods is
called ________ costing.
42) A document that details the resources available in stock for use in production is the
________ ________ report.
43) A document detailing the work completed on individual orders as they move through the
manufacturing process is the ________ ________ report.
44) An out-of-stock condition may occur if the ________ ________ is not known for a particular
inventory item.
45) Systems that include software for defining the manufacturing process or tools to increase
productivity are known as ________ systems.
46) The ________ in MRP is used comprehensively to include all types of inventories.
47) In the production-planning application system, ________ contain information about the work
center, length of time, and tooling required to perform each task.
48) There are ________ major elements that enter into the cost of manufacturing a product.
49) To assist in the overall production-control function, ________ ________ reports are
distributed to department supervisors.
50) CIM significantly alters a manufacturer’s cost behavior patterns by substituting ________
________ for direct labor.
51) An element that influences the total cost of an activity is a(n) ________ ________.
52) In MRP II, the production ________ control module is used to implement the production
plan and to reduce delays and waiting time by monitoring feedback and production and shop
floor status data.
53) In contrast to a(n) ________ environment, there is no advance scheduling in a(n) ________
environment.
54) Systems ________ is “mission critical” in quick response manufacturing systems.
55) ________ ________ is a concept based on the idea that inventory is a waste.
56) ________ ________ scanners require a direct line of sight in order to function.
57) ________ ________ in RFID eliminate the need for direct line of sight to the RFID tag.
58) EAN-13 is a(n) ________ coding standard which is a superset of the original 12-digit UPC
system.
59) GTIN is an identifier used to look up product information in a(n) ________ like UPCs.
60) A production system in which parts are produced only as they are required in a subsequent
operation is known as
A) periodic production.
B) green production.
C) lean production.
D) push production.
61) Radio-frequency identification is an automatic identification technology that uses
A) high frequency radio waves to send and receive data between RFID tags and readers.
B) low power radio waves to send and receive data between RFID tags and readers.
C) bar codes to eliminate the need for direct line of sight to the RFID tags.
D) radio waves to send and receive data between bar coded tags.
62) The following are reasons RFID tags are not widely used except
A) RFID is more costly that printed bar codes.
B) there is a much higher error rate in RFID than in scanning printed bar codes.
C) RFID cannot be used in lean manufacturing.
D) All of the above are reasons RFID tags are not widely used.
63) ________ is a bar coding standard which is a superset of the original 12-digit UPC system.
A) RFID-12
B) GS1-12
C) GTIN-13
D) EAN-13
64) GTIN stands for
A) Global Trade Item Number.
B) Global Tracking Item Number.
C) Global Tracking Identifying Number.
D) Global Trade Identifying Number.
65) GTIN is an identifier used to look up product information in
A) GS1 tables.
B) Web-based list structures.
C) databases.
D) eBXML.
66) Which of the following controls is not a typical function found in the production business
process of manufacturing firms?
A) Cost accounting
B) Production control
C) Property accounting
D) Capital expenditure review and authorization
67) Which inventory control is the most critical in the production business process?
A) Separation of functions
B) Maintaining basic records and documentation
C) Periodic physical counts and tests against independent records
D) All of these controls are critical to inventory control in the production business process.
68) The document which specifies detailed labor operations, their sequencing, and their related
machine requirements is
A) the bill of materials.
B) the master operations list.
C) either the bill of materials or master operations list.
D) the product specification and design abstract.
69) Several factors are integrated when determining what products should be manufactured. The
factor which is predominantly driven by influences external to the production business process is
A) product requirements.
B) demand for the product.
C) production resources available to the firm.
D) Answers A and C are correct.
70) The document which gives authorization to the production department to manufacture a
product is a
A) production order.
B) materials requisition.
C) purchase order.
D) sales forecast.
71) The source for the item and quantity information shown on a materials requisition is the
A) bill of lading.
B) bill of materials.
C) inventory status report.
D) factor availability report.
72) The department that receives copies of materials requisitions from both the inventory control
function and the production department is
A) accounting.
B) sales.
C) accounts payable.
D) purchasing.
73) The document used by the cost accounting function to establish a WIP record for each job is
the
A) sales forecast.
B) production order.
C) materials requisition.
D) job time card.
74) Which document is not updated when a manufacturing order is complete and goods are
transferred to stores?
A) Production order
B) WIP record
C) Finished goods inventory records
D) Materials requisition
75) The general formula for calculating the inventory reorder point is
A) average inventory usage rate multiplied by lead time.
B) economic order quantity less average inventory usage rate.
C) lead time multiplied by economic order quantity.
D) lead time multiplied by average inventory turnover rate.
76) A manufacturing company wants to know the optimal amount to order of part number 45612.
It should gather appropriate inventory information about the part and then calculate the part’s
A) inventory usage rate.
B) lead time.
C) economic order quantity.
D) reorder point.
77) Calculation of the reorder point requires knowledge of
A) the economic order quantity multiplied by the average usage rate.
B) the time from the issuance of a purchase order until the order is received.
C) the average time from the issuance of a purchase order until the economic order quantity
occurs.
D) the minimum inventory usage rate.
78) Which is the best way for a company to prevent having outdated inventory on hand?
A) Store inventory securely
B) Classify inventory according to location in the company’s records
C) Evaluate inventory turnover
D) Write down the inventory balance when a warehouse employee finds outdated inventory
79) Which of the following is not a concern regarding the storage and handling of inventory
items?
A) Price paid per unit
B) Protection against damage or spoilage
C) Avoidance of obsolescence
D) Security against embezzlement
80) Control over inventory includes
A) storing.
B) handling.
C) spoilage.
D) Answer A and B are correct.
81) Inventories serve as a buffer between different operations in a
A) just-in-time production system.
B) materials as needed system.
C) perpetual inventory system.
D) Answers A and B are correct.
82) Which of the following objectives in a property accounting application system relates to the
process of periodic comparison of physical assets with the accounting records?
A) Provide for appropriate depreciation and/or amortization calculations
B) Maintain adequate records that identify assets with description, cost, and physical location
C) Provide for reevaluation for insurance and replacement cost purposes
D) Provide management with reports for planning and controlling individual asset items
83) The file or record that is essentially a subsidiary ledger for tangible assets, such as land,
buildings, machinery, and equipment, is the
A) fixed assets register.
B) fixed assets control ledger.
C) property master ledger.
D) property control ledger.
84) Which of the following is the best internal control over fixed assets?
A) Analyze monthly variances between authorized and actual expenditures.
B) Establish a written company policy distinguishing between capital and revenue expenditures.
C) Require acquisitions to be authorized by user departments.
D) Use a budget to control acquisitions and retirements.
85) Which of the following is the best internal control over disposals of fixed assets?
A) Periodically analyze the scrap sales revenue and the repairs and maintenance expense
accounts.
B) Periodically compare removal work orders and disposal authorization.
C) Separate the duties of the official authorizing a disposal and the official approving removal
work orders.
D) Use serial numbers to identify fixed assets that could be sold.
86) The employee who is responsible for the custody of investments should
A) authorize the purchase of additional investments.
B) maintain the investment register.
C) open the safety deposit or depository area only when a second employee is present.
D) conduct periodic physical inventories comparing the investment register to the investments on
hand.
87) Which of the following is not a common internal accounting control procedure in a property
business process?
A) Having physical inventories of property taken periodically under the supervision of staff who
are responsible for the custody of the assets
B) Requiring authorization by an official or committee for expenditures over a certain amount
C) Reconciling detailed subsidiary property records with the control accounts at least annually
D) Having the property appraised periodically for insurance purposes
88) Solids modeling, finite-elements analysis, and automated drafting are common capabilities of
A) CIM.
B) CADD.
C) CAM.
D) MRP II.