Chapter 14 - Review Questions (Production Cycle)

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. MRP-II (Correct. MRP-II is a push form of manufacturing that is appropriate for mass production of standardized items for which demand is predictable.)

Cost accounting plays what role in the production cycle? a. Provides information about product pricing b. Assists managers determine how many items produced will be sold c. Conducts environmental scans to determine the strength of an entity's competition d. All of the above. e. None of the above.

a. Provides information about product pricing

Process costing would be applied to mass produced items because it would not be cost effective to trace product costs to each individual item produced. a. True b. False

a. True

The analysis of warranty and repair costs is a proper control for the threat of poor product design resulting in excess costs. a. True b. False

a. True

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. prevention costs (Correct. Increases in prevention costs often reduce the time and cost of inspecting products, as well as the proportion of defective products.)

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. product design (Correct. Decisions made during product design determine the majority of costs.)

Activity Based Costing is an appropriate mechanism for allocating overhead for all entities. a. True b. False

b. False

Because equipment is generally a large, easily identifiable asset, no recording and tracking internal controls are necessary. a. True b. False

b. False

Product Planning is the first step in production cycle. a. True b. False

b. False

Which of the following documents authorize the removal of raw materials inventory from the storeroom to a factory location where it will be put into production? a. Production order b. Materials Requisition c. Move ticket d. Picking ticket e. None of the above.

b. Materials Requisition

Which document captures information about labor used in production? a. move ticket b. job-time ticket c. operations list d. bill of materials

b. job-time ticket (Correct. The job-time ticket records time spent on each activity.)

Which of the following is (are) a valid statement about ABC systems? a. ABC systems are more efficient than the traditional method in allocating direct material costs to products. b. ABC systems are more efficient than the traditional method in allocating direct labor costs to products. c. Allocate overhead costs through the use of multiple cost drivers. d. None of the above

c. Allocate overhead costs through the use of multiple cost drivers.

Which of the following threats is related the production operation activity in the production cycle? a. Poor product design resulting in excess costs b. Inaccurate cost data include direct labor costs c. Poor performance d. None of the above.

c. Poor performance

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. bill of materials (Correct. The bill of materials lists the components of a finished product.)

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. both job-order and process costing (Correct. Activity-based costing can be used with either job-order or process costing.)

Which of the following is an advantage of bar-coding over RFID? a. speed b. accuracy c. cost d. safety

c. cost (Correct. Bar-coding is currently less expensive than RFID.)

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. regular materials usage reports that highlight variances from standards (Correct. Although variances could indicate theft, they are more likely to reflect changes in efficiency.)

Job order costing would be most appropriate when a. a product is homogeneous. b. it is mass-produced. c. the products are discretely identifiable. d. Both 1 and 2. e. All of the above.

c. the products are discretely identifiable.

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. excess production (Correct. An MPS schedules production to satisfy demand and, therefore, reduces the chance of overproduction.)

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. throughput (Correct. Throughput is the measure of the number of good units produced per unit of time.)

Costs tracked in the production cycle include a. raw materials. b. indirect labor. c. machinery and equipment. d. direct labor. e. All of the above.

e. All of the above.

Threats in the production cycle do not include: a. inaccurate data. b. poor performance. c. theft of fixed assets. d. disruption of operations. e. All of the above.

e. All of the above.

Which of the following controls and/or devices are used to safeguard inventories? a. RFID tags b. Access controls c. Bar code scanners d. None of the above. e. All of the above.

e. All of the above.

Which of the following controls best addresses the threat of inaccurate cost data? a. Analysis of warranty and repair costs b. Documentation of all inventory movement c. Production planning systems d. Training e. Source data automation

e. Source data automation

Quality control costs do NOT include: a. prevention costs. b. inspection costs. c. internal failure costs. d. external failure costs. e. opportunity costs.

e. opportunity costs.

Which of the following would NOT be included in manufacturing overhead? a. Quality control costs b. Power c. Rent d. Property taxes e. Insurance f. All of the above would be included in manufacturing overhead.

f. All of the above would be included in manufacturing overhead.

Which of the following is NOT an objective of cost accounting? a. provide information for planning b. provide information for evaluating performance d. collect and process information used to calculate inventory e. collect and process information used to calculate cost of goods sold f. None of the above.

f. None of the above.