Chapter 14 AIS

________ identifies costs with the corporation's strategy for production of goods and services. A) Activity-based costing B) Job-order costing C) Process costing D) Manufacturing costing

A) Activity-based costing

Why might an organization find it most beneficial to involve accountants in product design? A) Because generally at least 65% of product costs are determined in the design stage and accountants can help minimize product costs B) Because accountants are generally able to improve the quality of new products C) Because involving accountants in product design boosts firm morale D) Because accountants are generally able to identify what consumers want in a new product

A) Because generally at least 65% of product costs are determined in the design stage and accountants can help minimize product costs

How can CAD software help improve the efficiency and effectiveness of the product design process? A) It can eliminate the costs associated with creating and destroying physical prototypes. B) It can simulate how new products will be manufactured. C) It can store all the data associated with all products. D) All of the above

A) It can eliminate the costs associated with creating and destroying physical prototypes.

How can PLM software improve the efficiency and effectiveness of the product design process? A) It can eliminate the costs associated with creating and destroying physical prototypes. B) It can simulate how new products will be manufactured. C) It can store all the data associated with all products. D) All of the above

A) It can eliminate the costs associated with creating and destroying physical prototypes.

Traditionally, what did manufacturing firms use to track the amount of time a worker spends on each specific task? A) Job-time ticket. B) Sign-in sheet. C) Punch card. D) RFID tags.

A) Job-time ticket.

Which of the following is not a benefit of activity-based costing? A) Lower cost. B) Better decisions. C) Improved cost management. D) Identification of cost drivers

A) Lower cost.

The VP of Manufacturing at Roshanak Incorporated wants to buy a new die cast machine for production. The die cast machine is expected to cost around $1,000,000. Which document will most likely be used to solicit bids from suppliers? A) RFP B) eVoice C) RFJ D) RFB

A) RFP

What is the main difference between MRP-II and JIT manufacturing systems? A) The length of the planning horizon B) JIT uses long-term customer demand for planning purposes, but MRP-II uses short-term customer demand for planning purposes. C) MRP-II relies on EDI, but JIT does not. D) There are no significant differences between MRP-II and JIT.

A) The length of the planning horizon

What does the first term in the throughput formula, productive capacity, represent? A) The maximum number of units that can be produced given current technology. B) The percentage of total production time used to manufacture a product. C) The percentage of "good" units produced given current technology. D) The minimum number of units that can be produced given current technology.

A) The maximum number of units that can be produced given current technology.

1) The AIS compiles and feeds information among the business cycles. What is the relationship between the revenue and production cycles regarding the exchange of information? A) The revenue cycle provides sales forecast and customer order information to the production cycle, but the production cycle sends information back to revenue about finished goods production. B) The revenue cycle receives information from the production cycle about raw materials needs. C) The production cycle sends cost of goods manufactured information back to the revenue cycle. D) The production cycle does not exchange information with the revenue cycle.

A) The revenue cycle provides sales forecast and customer order information to the production cycle, but the production cycle sends information back to revenue about finished goods production.

Which of the following controls can minimize the threat of misleading reports? A) The use of innovative performance metrics. B) The use of periodic physical counts of inventory and reconciliation of those counts to recorded quantities. C) The use of encryption. D) The use of production planning systems.

A) The use of innovative performance metrics.

To control for risks associated with the threat of inventory loss, who should have primary responsibility for work-in-process inventories? A) a factory supervisor B) the inventory stores department C) purchasing D) the receiving department

A) a factory supervisor

3) What specific control can help restrict the rights of authorized users to only the portion of a database needed to complete their specific job duties? A) an access control matrix B) passwords and user IDs C) closed-loop verification D) specific authorization

A) an access control matrix

At the end of each production run, preventive maintenance is done on the assembly line. The expenses associated with this maintenance are ________ overhead. A) batch-related B) product-related C) company wide D) department-based

A) batch-related

How does an MRP inventory system reduces inventory levels? A) by reducing the uncertainty regarding when materials are needed B) by receiving materials exactly when needed and in exact quantities C) by computing the exact costs of purchasing and carrying inventory D) none of the above

A) by reducing the uncertainty regarding when materials are needed

Using technology such as robots and computer-controlled machinery to shift from mass production to custom order manufacturing is referred to as A) computer integrated manufacturing (CIM). B) lean manufacturing. C) Six Sigma. D) computer-aided design (CAD).

A) computer integrated manufacturing (CIM).

Labor productivity is measured by the quantity produced divided by the labor time required to produce it. All other things held constant, an increase in labor productivity will increase throughput by A) increasing productive capacity. B) increasing productive processing time. C) increasing yield. D) increasing all components of throughput.

A) increasing productive capacity

Direct labor must be tracked and accounted for as part of the production process. Traditionally, direct labor was tracked using ________ but an AIS enhancement is to use ________ to record and track direct labor costs. A) job-time tickets; coded identification cards B) move tickets; coded identification cards C) employee earnings records; job-time tickets D) time cards; electronic time entry terminals

A) job-time tickets; coded identification cards

"Push manufacturing" is also known as A) manufacturing resource planning (MRP). B) just-in-time manufacturing system (JIT). C) the economic order quantity (EOQ) system. D) ahead-of-time production implementation (ATPI).

A) manufacturing resource planning (MRP)

Gulshan Parvana operates a machine shop in Istanbul, Turkey. She places bids on small projects in the metropolitan area. Which of the following is most likely to be a cost driver that should be considered when determining how to allocate utility costs? A) number of projects completed B) number of units produced C) number of labor hours D) sales revenue

A) number of projects completed

Yasamin Roshni owns and operates a small deli in Miami, Florida.. She maintains a file that lists the steps required to make each of her famous subs. These step-by-step instructions are examples of a(n) A) operations list. B) bill of materials. C) production order. D) materials requisition.

A) operations list.

The expenses associated with the use of clean rooms in the production of computer hard drives are ________ costs. A) prevention B) inspection C) internal failure D) external failure

A) prevention

11) Identify one control that can be used to mitigate the threat of under-production. A) production planning systems B) analysis of warranty and repair costs C) encryption D) insurance

A) production planning systems

A master production schedule is used to develop detailed A) timetables of daily production and determine raw material needs. B) reports on daily production and material usage. C) daily reports on direct labor needs. D) inventory charts.

A) timetables of daily production and determine raw material needs.

________ is an efficient way to track and process information about raw materials used in production. A) A just-in-time inventory system B) Identifying materials with bar codes or RFID tags C) A materials resources planning inventory system D) Job-order costing

B) Identifying materials with bar codes or RFID tags

________ costs are expenses associated with quality assurance activities. A) Prevention B) Inspection C) Internal failure D) External failure

B) Inspection

________ are associated with testing to ensure that products meet quality standards. A) External failure costs B) Inspection costs C) Internal failure costs D) Prevention costs

B) Inspection costs

MRP-II is to MRP, as lean manufacturing is to A) EOQ. B) JIT. C) push manufacturing. D) reorder point.

B) JIT.

Which of the following controls can minimize the threat of theft of inventory? A) The use of innovative performance metrics. B) The use of periodic physical counts of inventory and reconciliation of those counts to recorded quantities. C) The use of encryption. D) The use of production planning systems

B) The use of periodic physical counts of inventory and reconciliation of those counts to recorded quantities.

The risks associated with over-production are likely of greatest concern to which company below? A) a cereal manufacturer B) a manufacturer that produces designer clothing C) a manufacturer of printer paper D) a mailbox manufacturer

B) a manufacturer that produces designer clothing

Grizzly Delivery calculates the cost per delivery by identifying variables as cost drivers, and allocating overhead accordingly. What costing approach does Grizzly Delivery use? A) job-order B) activity-based C) unit-based D) process

B) activity-based

For replacement of inventories and assets destroyed by fire or other disasters, an organization needs A) stand-by facilities. B) adequate insurance coverage. C) source data automation. D) All of the above are correct

B) adequate insurance coverage

Identify one control that can be used to mitigate the threat of poor product design that results in excess costs. A) production planning systems B) analysis of warranty and repair costs C) encryption D) insurance

B) analysis of warranty and repair costs

Grizzly Delivery determines the cost per delivery by averaging total cost over the number of deliveries. What costing approach does Grizzly Delivery use? A) unit-based B) job-order C) process D) activity-based

B) job-order

"Pull manufacturing" is also known as A) manufacturing resource planning (MRP). B) just-in-time manufacturing system (JIT). C) the economic order quantity (EOQ) system. D) ahead-of-time production implementation (ATPI).

B) just-in-time manufacturing system (JIT).

Sule Technologies initiated a just-in-time inventory system in 2013. Now the production manager, Chan Ziaou, wants to apply the same principles to the entire production process. His recommendation is that Sule adopt a A) master production scheduling system. B) lean manufacturing system. C) manufacturing resource planning system. D) computer-integrated manufacturing system.

B) lean manufacturing system.

Yasamin Roshni owns and operates a small deli in Miami, Florida. Each afternoon, she prepares a shopping list that describes the quantity and variety of ingredients that she will purchase in the evening from her wholesaler. The shopping list is an example of a(n) A) bill of materials. B) materials requisition. C) operations list. D) production order.

B) materials requisition.

Which process or activity relates to overproduction? A) product design B) planning and scheduling C) production operations D) cost accounting

B) planning and scheduling

In activity-based costing, the expenses associated with planning and design of new products are ________ overhead. A) batch-related B) product-related C) company wide D) expenditure-based

B) product-related

6) Which of the following organization controls should be implemented and maintained to counteract the general threat that the loss of production data will greatly slow or halt production activity? A) Store key master inventory and production order files on-site only to prevent their theft. B) Back up data files only after a production run has been physically completed. C) Access controls should apply to all terminals within the organization. D) Allow access to inventory records from any terminal within the organization to provide efficient data entry.

C) Access controls should apply to all terminals within the organization.

What issue did Airbus encounter when using CAD software to help design the A380 Superjumbo airliner? A) The actual A380 was heavier than the CAD model. B) The actual A380 was not able to carry as much weight as the CAD model. C) Design teams used different versions of the same CAD software, resulting in key information loss. D) The CAD software was not advanced enough to help design the A380. Answer: C

C) Design teams used different versions of the same CAD software, resulting in key information loss.

Identify the cost below most likely to be classified as manufacturing overhead. A) Production workers' pay. B) Raw materials used in production. C) Insurance cost. D) Research and development cost

C) Insurance cost.

Which of the following is not proposed to be an advantage of activity-based costing? A) Better product mix decisions. B) Better product pricing decisions. C) Less complex than traditional cost systems. D) Better decision.

C) Less complex than traditional cost systems.

The acronym "RFP" stands for what? A) Request for Project B) Request for Processing C) Request for Proposal D) Request for Purchase

C) Request for Proposal

Which of the following controls can minimize the threat of unauthorized disclosure of sensitive information? A) The use of innovative performance metrics. B) The use of periodic physical counts of inventory and reconciliation of those counts to recorded quantities. C) The use of encryption. D) The use of production planning systems.

C) The use of encryption.

Yasamin Roshni owns and operates a small deli in Miami, Florida. She maintains a file that contains the ingredients used to make each of her famous subs. The ingredients needed to make a specific sub are most similar to a(n) A) operations list. B) production order. C) bill of materials. D) materials requisition

C) bill of materials

In activity-based costing, expenses associated with the purchase of health care insurance for employees are ________ overhead. A) batch-related B) product-related C) company wide D) expenditure-based

C) company wide

The use of various forms of information technology in the production process is referred to as A) computerized investments and machines. B) computerized integration of machines. C) computer-integrated manufacturing. D) computer intense manufacturing

C) computer-integrated manufacturing.

In an Activity-Based Costing (ABC) system, a cause-and-effect relationship is known as a A) cost stimulator. B) overhead stimulator. C) cost driver. D) cost catalyst.

C) cost driver

Manufacturing overhead is best described as A) costs that cannot be traced directly to specific jobs or processes. B) costs that are economically feasible to trace directly to specific jobs or processes. C) costs that are not economically feasible to trace directly to specific jobs or processes. D) costs that management has decided not to trace directly to specific jobs or processes.

C) costs that are not economically feasible to trace directly to specific jobs or processes

Sule Technologies installed a new production monitoring system that will reduce system breakdowns by 35%. The new system will increase throughput by A) increasing productive capacity. B) increasing yield. C) increasing productive processing time. D) increasing all components of throughput

C) increasing productive processing time.

In addition to identifying and dealing with defective products before they reach customers, quality management is concerned with initiating process changes that will reduce the number of defective units produced. All other things held constant, a decrease in the number of defective units will increase throughput by A) increasing productive capacity. B) increasing productive processing time. C) increasing yield. D) increasing all components of throughput

C) increasing yield.

The expenses associated with disposal of defective products are ________ costs. A) prevention B) inspection C) internal failure D) external failure

C) internal failure

The ________ is the production cycle document that specifies the quantity of each product to be produced and when production should begin. A) receiving report B) bill of lading C) master production schedule D) operations list

C) master production schedule

The ________ authorizes the transfer of raw materials from the storeroom to the production floor. A) bill of materials B) production order C) materials requisition D) move ticket

C) materials requisition

Detailed data about reasons for warranty and repair costs is considered an applicable control used to mitigate the threat of A) underproduction. B) overproduction. C) poor product design. D) suboptimal investment of fixed assets.

C) poor product design

Grizzly Delivery determines the cost per delivery by summing the average cost of loading, unloading, transporting, and maintenance. What costing approach does Grizzly Delivery use? A) job-order B) unit-based C) process D) activity-based

C) process

The production cycle differs from the revenue and expenditure cycles for all the following reasons except A) cost accounting is involved in all activities. B) not all organizations have a production cycle. C) there are no direct external data sources or destinations. D) very little technology exists to make activities more efficient.

C) there are no direct external data sources or destinations.

7) The threat of loss of data exposes the company to A) the loss of assets. B) ineffective decision making. C) inefficient manufacturing. D) All of the above are correct.

D) All of the above are correct.

Which of the following is not a product design objective? A) Design a product that meets customer requirements. B) Design a quality product. C) Minimize production costs. D) Make the design easy to track for cost accounting purposes.

D) Make the design easy to track for cost accounting purposes

What is the primary drawback to using a volume-driven base, such as direct labor or machine hours, to apply overhead to products in a traditional cost accounting system? A) The cost accountant may not fully understand how to track direct labor or machine hours. B) It is difficult for an AIS to incorporate such a measurement into its system. C) It is difficult for an ERP to incorporate such a measurement into its integrated system. D) Many overhead costs are incorrectly allocated to products since they do not vary with production volume.

D) Many overhead costs are incorrectly allocated to products since they do not vary with production volume.

Which type of information below should not be maintained by the AIS in accounting for fixed assets? A) Identification/serial number . B) Cost. C) Improvements. D) Market value.

D) Market value.

________ are incurred to ensure that products are created without defects the first time. A) External failure costs B) Inspection costs C) Internal failure costs D) Prevention costs

D) Prevention costs

Which objective listed below is not a cost accounting objective for the production cycle? A) Provide information for planning, controlling, and evaluating the performance of production operations. B) Provide cost data about products used in pricing and product mix decisions. C) Collect and process the information used to calculate inventory and cost of goods sold amounts that appear in the financial statements. D) Provide tests of audit control functions as part of the AIS.

D) Provide tests of audit control functions as part of the AIS

Which of the following controls can minimize the threat of over- and underproduction? A) The use of innovative performance metrics. B) The use of periodic physical counts of inventory and reconciliation of those counts to recorded quantities. C) The use of encryption. D) The use of production planning systems.

D) The use of production planning systems.

Identify the role below that accountants can play in the production cycle. A) participate in product design B) perform cost analysis C) help an organization choose an inventory control system D) all of the above

D) all of the above

The operations list shows A) the labor and machine requirements. B) the steps and operations in the production cycle. C) the time expected to complete each step or operation. D) all of the above

D) all of the above

5) The best control procedure for accurate data entry is A) the use of on-line terminals. B) an access control matrix. C) passwords and user IDs. D) automation of data collection.

D) automation of data collection.

An organization can implement which of the following controls to reduce the threat of inventory theft or damage? A) review and approval of fixed asset acquisitions B) improved and more timely reporting C) better production and planning systems D) document all movement of inventory through the production process

D) document all movement of inventory through the production process

The expenses associated with a product recall are ________ costs. A) prevention B) inspection C) internal failure D) external failure

D) external failure

The cost of a product liability claim can be classified as a(n) A) prevention cost. B) inspection cost. C) internal failure cost. D) external failure cost.

D) external failure cost.

Yasamin Roshni owns and operates a small deli in Miami, Florida. Each morning she prepares a list that describes the quantity and variety of subs that will be prepared during the day. This list is an example of a(n) A) bill of materials. B) operations list. C) materials requisition. D) production order.

D) production order.

Identify a key feature associated with materials requirements planning. A) determining economic order quantity for all materials B) minimizing or eliminating carrying and stockout costs C) determining the optimal reorder points for all materials D) reducing required inventory levels by scheduling production, rather than estimating needs

D) reducing required inventory levels by scheduling production, rather than estimating needs

What information is necessary to create the master production schedule? A) engineering department specifications and inventory levels B) engineering department specifications and sales forecasts C) special orders information and engineering department specifications D) sales forecasts, special orders information, and inventory levels

D) sales forecasts, special orders information, and inventory levels