315 Chap 16
controls for 2. fixed asset theft
- restrict access to fixed assets - keep detailed records of fixed assets including disposals
manufacturing resource planning ( MRP-II)
An extension of materials resource planning that seeks to balance existing production capacity and raw materials needs to meet forecasted sales demands. Also referred to as push manufacturing because goods are produced in expectation of customer demand.
Backup and disaster recovery procedures have the greatest impact in terms of reducing the risk of ___. A. inaccurate production cycle data B. loss or destruction of production cycle data C. unauthorized disclosure of sensitive production cycle information D. poor product design
B
The costs associated with testing products as part of quality control are referred to as A. external failure costs. B. inspection costs. C. internal failure costs. D. prevention costs.
B
Which of the following controls could be used to mitigate the threat of inaccurate or invalid master data in the production cycle? A. Restriction of physical access to fixed assets B. Data processing integrity controls C. Maintaining detailed records of fixed assets, including disposal D. Physical inventory of all fixed assets
B
Which of the following controls would be effective in preventing the threat that poor product design results in excess costs? A. Lean manufacturing B. Analysis of warranty and repair costs C. Production planning systems D. Review and approval of production schedules and orders
B
Which of the following controls reduces the risk of theft of inventory? (Check all that apply.) A. Training B. Restriction of access to inventory master data C. Documentation of all inventory movement D. Source data automation
B C
Controlling or restricting access to production cycle data helps reduce the risk of _____. (Check all that apply.) A. over- and underproduction B. inaccurate master data C. suboptimal investment in fixed assets D. unauthorized disclosure of sensitive information
B D
Which type of approach to manufacturing tries to anticipate customer demand when deciding how much to produce and when? A. None of these are correct B. Pull manufacturing C. Push manufacturing D. Lean manufacturing
C
Which of the following controls reduces the risk of unauthorized disclosure of sensitive production cycle information? (Check all that apply.) A. Review of all changes to master data B. Data processing integrity controls C. Encryption D. Access controls
C D
Use of robots & other IT as part of production process.
CIM
Given the following facts: - Total monthly costs to operate the finishing department are $300,000 - The maximum number of products that the finishing department can complete in one month without working overtime is 1,800,000 - In the current month, the department completed 1,200,000 products What is the cost of unused capacity? A. $150,000 B. None of these are correct C. $200,000 D. $100,000
D
Insurance is one way to address the risk of _____. A. poor performance B. disruption of operations C. suboptimal investment in fixed assets D. loss of inventory or fixed assets due to fire or other disasters
D
The costs associated with scrap, rework, and waste as part of quality control are referred to as A. prevention costs. B. inspection costs. C. external failure costs. D. internal failure costs.
D
The threat of inappropriate allocation of overhead costs is best mitigated by which of the following controls? A. Innovative performance metrics, such as throughput B. Data processing integrity controls C. Categorizing quality control costs as prevention, inspection, internal failure, and external failure D. Activity-based costing systems
D
planning and scheduling activities threats to such activities, and examples of controls that can be used to mitigate/reduce such threats.
Over- and underproduction 5.1 Production planning systems 5.2 Review and approval of production schedules and orders 5.3 Restriction of access to production orders and production schedules
process costing
a cost system that assigns costs to each process, or work center, in the production cycle, and then calculates the average cost for all units produced
job-order costing
a cost system that assigns costs to specific production batches or jobs
production order
a document authorizing the manufacture of a specified quantity of a particular product
materials requisition
authorizes the removal of the necessary quantity of raw materials from the storeroom
controls for 6. disruption of operations
backup and disaster recovery plans
control for 3. loss or destruction of data
backup and disaster recovery procedures
PLM 3 key components
computer aided design digital manufacturing product data management software
1.A factor that causes costs to change.
cost driver
move tickets
documents that identify the internal transfer of parts, the location to which they are transferred, and the time of the transfer
what could go wrong with product design and planning and scheduling
1. poor product design resulting in excess costs 2. over and under production
4. Explain the planning and scheduling activities, key decisions and information needs for these activities,
goal: develop a production plan efficient enough to meet existing orders and anticipated short-term demand while minimizing inventories of both raw materials and finished goods -2 methods 1. manufacturing resource planning 2. lean manufacturing key documents -master production schedule (MPS) -production order - materials requisition -move tickets
controls for 5. loss of inventory or fixed assets due to fire or disasters
insurance and physical safeguards
Document that tracks transfer of inventory from one work center to another.
move ticket
A document that lists the steps required to manufacture a finished good.
operations list
controls for 3. misleading reports
performance metrics
controls for 3. poor performance
performance reporting
production cycle process
product design - create a product the meets customer requirements planning and scheduling - 2 types of production planning -- manufacturing resource planning (MRP-II) (push) -- lean manufacturing (pull) production operations cost accounting
Document that authorizes manufacture of a finished good
production order
controls for 4. suboptimal investments is fixed assets
solicit competitive bids
master production schedule (MPS)
specifies how much of each product is to be produced during the planning period and when that production should occur
bill of materials
specifies the part number, description, and quantity of each component used in a finished product
Measure of the number of good units produced in a period of time
throughput
Most costs are locked in at which stage in the production cycle? a. product design b. production planning c. production operations d. cost accounting
A
A cost system that assigns costs to specific production batches or jobs is known as A. process costing. B. manufacturing overhead. C. job-order costing. D. job-time ticket.
C
A request by an organization or department for suppliers to bid to supply a fixed asset that possesses specific characteristics is called A. requisition for proposal. B. proposal request. C. request for proposal. D. bid request.
C
controls for 2. inappropriate allocation of overhead costs
time-driven activity-based costing
The use of robots and other automated machinery in the production process is referred to as _____ A. PLM B. CIM C. CAD D. MPS
B
Whereas traditional cost accounting systems just assign the costs associated with research and development, expediting, and purchasing to overhead, activity-based costing systems would assign those costs to: A. None of these are correct B. Product-related overhead C. Companywide overhead D. Batch-related overhead
B
Which document captures information about labor used in production? a. move ticket b. job-time ticket c. operations list d. bill of material
B
Activity-based costing can be used to refine which of the following? a. job-order costing b. process costing c. both job-order and process costing d. neither job-order nor process costing
C
The costs associated with warranty and repairs for defective products sold to customers are referred to as A. inspection costs. B. internal failure costs. C. external failure costs. D. prevention costs.
C
A document that specifies how much of a finished good is to be produced during a specific time period
Master production schedule
control for 2. unauthorized disclosure of sensitive information
- access controls -encryption
controls for 1. poor product design resulting in excess costs
- analysis of cost arising from product design choices - analysis of warranty and repair cost
Controls for 1. inaccurate/ invalid master data
- data processing integrity - restrict access to master data - review changes to master data
documents from planning and scheduling
- materials requestion - production order - move tickets
product design 2 output documents
-- bill of materials -- operations list
production operations
-Actual manufacture of products; varies greatly across companies! §May involve use of IT, e.g., robots & computer-controlled machinery = Computer-Integrated Manufacturing (CIM). -CIM can •significantly reduce time & cost to make products •make custom-order manufacturing easier •CIM has implications for design of cost accounting systems
cost accounting
-Provides info for planning, controlling, & evaluating performance of production operations -Provides cost data about products for use in pricing & product mix decisions -Collects & processes information used to calculate inventory & COGS values that appear in company's F/S
controls for 2. over and under production
-production planning system - review and approve production orders and schedules -restrict access to orders and schedules
controls for 1. inventory theft
-restrict physical access - document movement of inventory - segregation of custody duties form authorization and recording
controls for 1. inaccurate cost data
-source data automation -data processing integrity controls
How does adoption of 3-D printing affect manufacturing? (Check all that apply.) A. Reduce cost to manufacture B. Improve inventory control C. Reduce time to manufacture D. Improve cost accounting
A C
2. Identify some of the general threats to the production business process, and provide examples of controls that can be used to mitigate/reduce such threats.
1. Inaccurate or invalid master data 1.1 Data processing integrity controls 1.2 Restriction of access to master data 1.3 Review of all changes to master data 2. Unauthorized disclosure of sensitive information 2.1 Access controls 2.2 Encryption 3. Loss or destruction of data 3.1 Backup and disaster recovery procedures
3. Explain the product design activities, key decisions and information needs for these activities
1. create product that meets customer requirements in terms of quality, durability, and functionality 2. minimizing production costs two outputs - bill of materials -operations list product-life-cycle management software can help with this
what could go wrong with cost accounting
1. inaccurate cost data 2. inappropriate allocation of overhead costs 3. misleading reports
general issues with the production cycle
1. inaccurate/ invalid master data 2. unauthorized disclosure of sensitive information 3. loss or destruction of data
what could go wrong in production operations
1. inventory theft 2. fixed asset theft 3. poor performance 4. suboptimal investments is fixed assets 5. loss of inventory or fixed assets due to fire or disasters 6. disruption of operations
6. Explain the cost accounting activities, key decisions and information needs for these activities,
1. provide information for planning, controlling and evaluating the performance of production operations - system must collect real-time data for timely decisions 2. provide accurate cost data about products for use in pricing and product mix decisions 3. collect and process the information used to calculate the inventory and cost of goods sold values that appear in the company's financial statements *must classify costs by various categories then assign costs to specific products and organizational units -job order or process costing - raw materials usage data -direct labor costs -machinery and equipment usage -manufacturing overhead costs
cost accounting activities threats to such activities, and examples of controls that can be used to mitigate/reduce such threats.
12. Inaccurate cost data 12.1 Source data automation 12.2 Data processing integrity controls 13. Inappropriate allocation of overhead costs 13.1 Time-driven activity-based costing 14. Misleading reports 14.1 Innovative performance metrics (e.g., throughput)
product design activities threats to such activities, and examples of controls that can be used to mitigate/reduce such threats.
4. Poor product design resulting in excess costs 4.1 Accounting analysis of costs arising from product design choices 4.2 Analysis of warranty and repair costs
Restricting physical access reduces the risk of ___ . (Check all that apply.) A. theft of fixed assets B. loss of inventory or fixed assets due to fire or other disasters C. poor performance D. theft of inventory
A D
production operations activities threats to such activities, and examples of controls that can be used to mitigate/reduce such threats.
6. Theft of inventory 6.1 Physical access controls 6.2 Documentation of all inventory movement 6.3 Segregation of duties—custody of assets from recording and authorization of removal 6.4 Restriction of access to inventory master data 6.5 Periodic physical counts of inventory and reconciliation of those counts to recorded quantities 7. Theft of fixed assets 7.1 Physical inventory of all fixed assets 7.2 Restriction of physical access to fixed assets 7.3 Maintaining detailed records of fixed assets, including disposal 8. Poor performance 8.1 Training 8.2 Performance reports 9. Suboptimal investment in fixed assets of fixed-asset acquisitions, including use of requests for proposals to solicit multiple competitive bids 10. Loss of inventory or fixed assets due to fire or other disasters 10.1 Physical safeguards (e.g., fire sprinklers) 10.2 Insurance 11. Disruption of operations 11.1 Backup and disaster recovery plans 11.2 Network and logical access controls
A document authorizing the manufacture of a specified quantity of a particular product is called A. production order. B. move tickets. C. materials requisition. D. bill of materials.
A
An increase in which component of quality costs is most likely to result in a decrease in the other three components? a. prevention costs b. inspection costs c. internal failure costs d. external failure costs
A
Production planning systems help reduce the risk of ______. A. over- and underproduction B. poor product design C. theft of inventory D. unauthorized disclosure of sensitive information
A
Which document lists the steps to be followed in manufacturing a product? A. Operations list B. Master production schedule C. Move ticket D. Bill of materials
A
Which document specifies how much to produce in each period? A. Master production schedule B. Operations list C. Production order D. Bill of materials
A
Which of the following controls could be used to mitigate the threat of over- and underproduction? A. Restriction of access to production orders and production schedules B. Physical access controls C. Documentation of all inventory movement D. Segregation of duties—custody of assets from recording and authorization of removal
A
Which of the following is used to test models of different product designs? A. CAD software B. CIM software C. Neither CAD nor CIM software D. Both CAD and CIM software
A
Which system is most likely to be used by a company that mass-produces large batches of standard items in anticipation of customer demand? a. MRP-II b. lean manufacturing c. activity-based costing d. throughput
A
How can accountants add value by reducing the risk of poor product design leading to excess costs? (Check all that apply.) A. Analyzing warranty and repair costs B. Analyzing costs of alternative product design choices C. Periodically counting inventory D. Maintaining detailed records of fixed assets
A B
operations list
A document that specifies the sequence of steps to follow in making a product, which equipment to use, and how long each step should take.
The production planning method that is referred to as "pull manufacturing" is called A. Master Production Scheduling. B. Manufacturing resource planning. C. Lean manufacturing. D. Computer-integrated Manufacturing.
C
Which control procedure is probably least effective in reducing the threat of inventory loss? a. limiting physical access to inventory b. documenting all transfers of inventory within the company c. regular materials usage reports that highlight variances from standards d. periodically counting inventory and investigating any discrepancies between those counts and recorded amounts
C
Which document authorizes the removal of raw materials from inventory for use in production? A. Move ticket B. Production order C. Materials requisition D. Master production schedule
C
Which document lists all the parts needed to manufacture a product? A. Operations list B. Master production schedule C. Bill of materials D. Machine operations list
C
Which document lists the components needed to manufacture a specific product?' a. operations list b. master production schedule c. bill of materials d. production order
C
Which of the following is an advantage of bar-coding over RFID? a. speed b. accuracy c. cost d. safety
C
Which of the following is referred to as "push" manufacturing? A. CIM systems B. PLM systems C. MRP-II systems D. Just-in-time systems
C
What is the number of good units produced in a given period of time called? a. productive capacity b. productive processing time c. yield d. throughput
D
Traditional cost-accounting systems treat set-up costs, inspections, and materials handling costs as components of overhead. Activity-based costing systems assign those three elements to: A. None of these are correct B. Product-related overhead C. Companywide overhead D. Batch-related overhead
D
The development of an MPS would be most effective in preventing which of the following threats? a. recording and posting errors b. loss of inventory c. production of poor-quality goods d. excess production
D
Which of the following controls could be used to mitigate the threat of disruption of operations? A. Time-driven activity-based costing B. Source data automation C. Insurance D. Backup and disaster recovery plans
D
Which of the following documents helps reduce the risk of theft of inventory? A. Operation list B. Bill of materials C. All three documents reduce the risk of inventory theft D. Move ticket E. None of these are correct
D
Which of the following files is used to collect cost data in the production cycle? A. Bill of materials B. Inventory C. Production orders D. Work-in-process
D
Which production cycle activity are accountants most deeply involved with? A. Production Operations B. Planning and scheduling C. Product design D. Cost accounting
D
lean manufacturing
Extends the principles of just-in-time inventory systems to the entire production process to minimize or eliminate inventories of raw materials, work in process, and finished goods. Lean manufacturing is often referred to as pull manufacturing because goods are produced in response to customer demand. (pull manufacturing)
Goods are produced in expectation of customer demand.
MRP-II
A list of the raw materials used to create a finished product
bill of materials
1. Describe the basic business activities and documents/journals/reports used in the production cycle.
bill or materials file stores information about how to manufacture each product - product design -planning and scheduling -production operations -cost accounting
Cost accounting method that assigns costs to specific batches or production runs and is used when the product or service consists of uniquely identifiable items.
job order costing
Production planning technique that's an extension of the JIT inventory control method
lean manufacturing
A document used to authorize removal of raw materials from inventory.
materials requisition
5. Explain the production operations activities, key decisions and information needs for these activities,
using various forms of IT in the production process is called CIM -can significantly affect the production process
