AIS ch 7

25. An example of automation of manufacturing design is a. Computer Aided Engineering b. Automated Storage and Retrieval Systems c. Computer Numerical Control d. robotics

a. Computer Aided Engineering

15. What is the economic order quantity if the annual demand is 10,000 units, set up cost of placing each order is $3 and the holding cost per unit per year is $2? a. 174 b. 123 c. 245 d. none of the above

a. 174

17. Which statement is not correct? a. general ledger creates a new cost record upon receipt of a work order from production planning and control b. cost accounting updates the cost record with data gathered from the materials requisition c. general ledger posts summary information about the manufacturing process based on a journal voucher prepared by cost accounting d. cost accounting computes variances and applies overhead to individual cost records

a. general ledger creates a new cost record upon receipt of a work order from production planning and control

3. The purpose of the cost accounting system is to a. produce information for inventory valuation b. authorize release of raw materials c. direct the movement of work-in-process d. determine material requirements

a. produce information for inventory valuation

34. In traditional firms, information reporting a. provides financially oriented information relating to operations b. presents detailed information about activities c. shows the allocation of costs first to activities and then to cost objects d. identifies nonessential activities

a. provides financially oriented information relating to operations

28. Characteristics of Just-In-Time manufacturing include all of the following except a. push manufacturing b. zero defects c. reduced setup time and small lot sizes d. reliable vendors

a. push manufacturing

27. Firms implement a Just-In-Time inventory approach to a. reduce investment in inventories b. determine the optimum inventory level using the EOQ model c. camouflage production problems d. ensure overproduction of inventory

a. reduce investment in inventories

6. All of the following are characteristics of batch processing except a. each item in the batch is similar b. batches are produced in accordance with detailed customer specifications c. batches are produced to replenish depleted inventory levels d. setting up and retooling is required for different batches

b. batches are produced in accordance with detailed customer specifications

32. Which statement is not correct? a. an activity driver is a means to measure the activity used by the cost object b. cost object describes the work performed in a firm c. activities cause costs d. cost objects create a demand for activities

b. cost object describes the work performed in a firm

. Which item does not describe a world-class company? a. the goal of a world-class company is to delight its customers b. customers in a world-class company are external departments only c. world-class companies work in cross-functional teams d. a world-class company has a flat organizational structure

b. customers in a world-class company are external departments only

20. The SAP R/3 system provides pre-defined modules to support business processes in the all of the following categories except a. human resources b. business process support c. strategic d. financial

c. strategic

39. Manufacturing flexibility incorporates four characteristics. These include all of the following except a. high product quality b. high inventory levels c. automation of manufacturing processes d. physical reorganization of production facilities

b. high inventory levels

The internal control significance of the excess materials requisition is that it a. indicates the amount of material released to work centers b. identifies materials used in production that exceed the standard amount allowed c. indicates the standard quantities required for production d. documents the return to raw materials inventory of unused production materials

b. identifies materials used in production that exceed the standard amount allowed

21. Which situation violates the segregation of functions control procedure? a. production planning and control is located apart from the work centers b. inventory control maintains custody of inventory items c. cost accounting has custody of and makes entries on cost records d. work centers record direct labor on job tickets

b. inventory control maintains custody of inventory items

33. Firms are adopting Activity Based Costing (ABC) because a. it facilitates the analysis of variances b. it more accurately allocates costs to products c. it recognizes the importance of direct labor as a component of total manufacturing cost d. the financial nature of the reports permits comparisons to be made among different types of products

b. it more accurately allocates costs to products

19. Computer integrated manufacturing groups all of the following technologies except a. robotics b. materials requirements planning c. automated storage and retrieval systems d. computer aided design

b. materials requirements planning

12. The storekeeper releases raw materials based on the a. production schedule b. materials requisition c. work order d. bill of materials

b. materials requisition

5. An example of a continuous process is the production of a. wedding invitations b. milk products c. jet aircraft d. all of the above

b. milk products

22. All of the following are internal control procedures that should be in place in the conversion cycle except a. calculation and analysis of direct material and direct labor variances b. retention of excess materials by work centers c. physical count of inventory items on hand d. limited access to raw material and finished goods inventories

b. retention of excess materials by work centers

8. The production schedule is a. the expected demand for the firm's finished goods for a given year b. the formal plan and authority to begin production c. a description of the type and quantity of raw materials and subassemblies used to produce a single unit of finished product d. the sequence of operations during manufacturing

b. the formal plan and authority to begin production

13. Which of the following is not an assumption of the Economic Order Quantity model? a. demand for the product is known with certainty b. total cost per year of placing orders is fixed c. lead time is known and is constant d. there are no quantity discounts

b. total cost per year of placing orders is fixed

14. Firms hold safety stock to compensate for a. mathematical weaknesses of the Economic Order Quantity model b. variations in lead time or daily demand c. fluctuations in carrying costs d. uncertainty in the estimation of ordering costs

b. variations in lead time or daily demand

16. If the daily demand is 40 units and the lead time is 12 days, the reorder point is a. 52 units b. 48 units c. 480 units d. none of the above

c. 480 units

24. A manufacturing process that is organized into group technology cells utilizing no human labor is called a. islands of technology b. process simplification c. Computer Integrated Manufacturing d. traditional manufacturing

c. Computer Integrated Manufacturing

26. An example of automation of manufacturing planning is a. Computer Aided Engineering b. Automated Storage and Retrieval Systems c. Materials Requirements Planning d. Computer Numerical Control

c. Materials Requirements Planning

4. Which process creates a homogeneous product through a continuous series of standard procedures? a. batch process b. make-to-order process c. continuous process d. none of the above

c. continuous process

35. Types of information provided by Activity Based Costing include a. a description of the single activity driver used for overhead application b. the dollar value of the direct material usage variance c. identification of cost drivers d. details of the components of the single overhead cost pool

c. identification of cost drivers

11. Inventory control performs all of the following tasks except it a. provides production planning and control with the inventory status report of finished goods b. updates the raw material inventory records c. prepares a materials requisition for each production batch d. records the completed production as an increase to finished goods inventory

c. prepares a materials requisition for each production batch

9. A move ticket a. is the formal plan and authority to begin production b. specifies the materials and production required for each batch c. records the work done in each work center d. authorizes the storekeeper to release materials to work centers

c. records the work done in each work center

23. Process simplification focuses on a. using Computer Numerical Controlled machines which stand alone within a traditional setting b. completely automating the manufacturing environment c. reducing the complexity of the physical manufacturing layout of the shop floor d. organizing the process into functional departments

c. reducing the complexity of the physical manufacturing layout of the shop floor

18. Which of the following is not a category of critical success factors in most manufacturing companies? a. product quality b. customer service c. revenue generation d. resource management

c. revenue generation

30. A flexible manufacturing system a. creates bottlenecks in the process b. leads to an "us" versus "them" attitude among workers c. shortens the physical distance between activities d. is organized along functional lines

c. shortens the physical distance between activities

38. Transaction authorization occurs in a traditional manufacturing environment in all of the following ways except a. production planning and control initiates production with a work order b. movement of the work through the production process follows the move ticket c. the sales department modifies work orders to match changes in demand d. the materials requisition authorizes the storekeeper to release materials to the work centers

c. the sales department modifies work orders to match changes in demand

The stages of the automation continuum are (in order) a. traditional, computer-integrated manufacturing, islands of technology, process simplification b. process simplification, traditional, islands of technology, computer-integrated manufacturing c. traditional, islands of technology, process simplification, computer-integrated manufacturing d. traditional, process simplification, computer-integrated manufacturing, islands of technology

c. traditional, islands of technology, process simplification, computer-integrated manufacturing

31. Deficiencies of the traditional cost accounting information system include all of the following except a. an emphasis on financial performance b. inaccurate cost allocations c. an emphasis on standard costs d. immediate feedback about deviations from the norm

d. immediate feedback about deviations from the norm

36. Which statement is not correct? a. the benchmark approach compares key activities with similar activities in other firms b. critical success factors include product and process quality c. the ABC model includes two perspectives: an allocation of cost perspective and a process perspective d. in world-class manufacturing firms, quality control activities at the end of the process are essential

d. in world-class manufacturing firms, quality control activities at the end of the process are essential

Which subsystem is not a part of the production system? a. directing the movement of work through the process b. determining raw material requirements c. authorizing work to be performed d. monitoring the flow of cost information related to production

d. monitoring the flow of cost information related to production

29. The cost of poor quality includes all of the following except a. cost of rework b. warranty claims c. scheduling delays d. proceeds from the sale of scrap

d. proceeds from the sale of scrap

37. All of the following are documents in batch process production systems except a. production schedule b. route sheet c. materials requisition d. purchase order

d. purchase order

7. When determining which items to produce, a firm must know a. last year's production level b. raw material inventory levels c. the standard cost of the item d. the sales forecast

d. the sales forecast