Chapter 14 The Production Cycle

Manufacturing overhead

All manufacturing costs that are not economically feasible to trace directly to specific jobs or processes.

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 demand.

Cost driver

Anything that has a cause-and-effect relationship to costs.

Materials requisition

Authorizes the removal of the necessary quantity of raw materials from the storeroom.

Master Production Schedule (MPS)

Specifies how much of each product is to be produced during the planning period and when that production should occur.

Production cycle

The recurring set of business activities and related data processing operations associated with the manufacture of products.

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.

Move tickets

Documents that identify the internal transfer of parts, the location to which they are transferred, and the time of the transfer.

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 unites produced.

Job-order costing

A cost system that assigns costs to specific production catches or jobs.

Production order

A document authorizing the manufacture of a specified quantity of a particular product.

Bill of materials

A document that specifies the part number, description, and quantity of each component used in a product.

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.

Job-time ticket

A document used to collect data about labor activity by recording the amount of time a worker spent on each specific job task.

Computer-Integrated Manufacturing (CIM)

A manufacturing approach in which much of the manufacturing process is performed and monitored by computerized equipment, in part through the use of robotics and real-time data collection of manufacturing activities.

Throughput

A measure of production efficiency representing the number of "good" units produced in a given period of time.

Request for Proposal (RFP)

A request by an organization or department for suppliers to bid to supply a fixed asset that possesses specific characteristics.

Activity-Based Costing (ABC)

A cost system designed to trace costs to the activities that create them.