chapter 7

Manufacturing resources planning (MRP II) has evolved into enterprise resource planning (ERP)

T

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

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

b - materias requirements planing

Which function is not a part of the batch production process? a. Plan and control production b. Prepare purchase orders c. Maintain inventory control d. Perform cost accounting

b - prepare purchase orders

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

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

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

Which of the following is not a problem associated with standard cost accounting? a. Standard costing motivates management to produce large batches of products and build inventory. b. Applying standard costing leads to product cost distortions in a lean environment. c. Standard cost data are associated with excessive time lags that reduce its usefulness. d. The financial orientation of standard costing may promote bad decisions. e. All of the above are problems with standard costing.

E- all of the above are problems associated with standard cost system

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. 116

a- 174 eoq= squareroot( (annual demand*fixed cost of placing order*2)/ holding or carrying cost per unit per year

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

Which statement is not correct? a. Inventories provide a competitive advantage. b. Inventories can invite overproduction. c. Inventories are expensive to maintain. d. Inventories may conceal problems.

a- inventories provide a competitive advantage

Which of the following is not a principle of lean manufacturing? a. Products are pushed from the production end to the customer b. All activities that do not add value and maximize the use of scarce resources must be eliminated c. Achieve high inventory turnover rate. d. A lean manufacturing firm must have established and cooperative relationships with vendors e. All of the above are lean manufacturing principles.

a- products are used from the production end to the customer

Characteristics of lean 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

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.

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- a formal plan and authority to begin production

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

Which statement is not correct? a. cost objects are the reasons for performing activities 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

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

Firms are abandoning Activity Based Costing (ABC) because a. it does not facilitates the analysis of variances b. it is complex and time consuming c. it does not recognize the importance of direct labor as a component of total manufacturing cost d. the financial nature of the reports does not permit comparisons to be made among different types of products

b- it is complex and time consuming

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

b- materials requisition

Which of the following statements about the EOQ inventory model assumptions is incorrect? a. Demand for the product is constant and known with certainty. b. The lead time is a variable. c. All inventories in the order arrive at the same time. d. Total ordering cost is a variable

b- the lead time is a variable

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- the total cost per year of placing orders is fixed

Which of the following is not true? a. The complexities of ABC have caused many firms to pursue value stream accounting. b. Value stream accounting captures costs related to value added activities within a specified department or activity. c. An essential aspect in implementing value stream accounting is defining the product family. d. Value stream accounting makes no distinction between direct costs and indirect costs.

b- value stream accounting captures costs related to value added activities within a specified department or activity

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

Which of the following is not true regarding ABC? a. ABC is too time-consuming and complicated for practical applications over a sustained period. b. ABC identifies the most and least profitable products and customers. c. ABC promotes the lean manufacturing philosophies of process simplification and waste elimination. d. All of the statements are true.

c- abc promotes the lean manufacturing philosophies of process simplification and waste elimination

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

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

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

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 at each work center

Lead time times daily demand is a. the economic order quantity b. safety stock c. the reorder point d. total inventory

c- reorder point

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

c- reorder point = daily demand * lead time

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

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

When one of the following statements is true? a. ERP evolved directly from MRP. b. ERP evolved into MRP and MRP evolved into MRP II c. MRP II evolved from MRP and MRP II evolved into ERP d. None of the above is true.

c-MRP II evolved from MRP and MRP II evolved into ERP

1. Which statement is true? a. World-class companies must maintain strategic agility and be able to turn on a dime. b. World-class companies motivate and treat employees like appreciating assets. c. Manufacturing firms that achieve world-class status do so by following a philosophy of lean manufacturing d. All the above are true

d

Which of the following would not be included as a value stream cost? a. Labor costs of employees who simply transport the product from cell to cell. b. Labor costs of employees who design the product. c. A charge per square foot for the value stream production facility including cost of rent and building maintenance. d. All of the above are value stream costs

d - all of the above are value stream costs

Which of the following is not an example of waste? a. Overproduction of products. b. Safety hazards that cause injury. c. Stand-alone processes that are not linked to upstream or downstream processes. d. All of the above are examples of waste.

d- all of the above are examples of waste

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

d- bill of manufacturing

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

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

All of the following are problems with traditional accounting information except: a. Managers in a lean setting require immediate information. b. The measurement principle tends to ignore standards other than money. c. Standard costing motivates nonlean behavior in operations. d. The overhead component in a manufacturing company is usually very large. e. All of the above are problems associated with traditional accounting information.

e - all of the above are problems associated with traditional accounting information

A company's value stream includes all steps in a process, both essential and non-essential, for which the customer is willing to pay.

f

Accounting in a world-class manufacturing environment emphasizes standard cost and variance analysis.

f

An excess materials requisition is a control that signals that a greater than standard quantity of materials is being ordered from the vendor.

f

Computer Integrated Manufacturing focuses on reducing the complexity of the physical manufacturing layout of the shop floor.

f

Cost accounting initiates a WIP account upon receiving the first move ticket of a batch.

f

T or F the cost accounting system authorizes the release of raw materials into production

f

The only objective of the Just-In-Time philosophy is to reduce inventory levels.

f

move tickers authorize the store keeper to release materials to work centers

f

a purchase requisition authorizes the store keeper to release materials to individuals or work centers in the production process

f - materials requisition

T or F batch processing creates a homogeneous product through a continuous series of standard procedures

f- continuous processing

The two subsystems of a traditional conversion cycle are the production system and the delivery system

f- production and cost accounting system

A company's value stream map depicts only the value added activities needed to complete a process or product.

t

ABC assigns costs to objects used on their use of activities

t

Lean manufacturing evolved from the Toyota Production System (TPS), which is based on the just-in-time (JIT) production model.

t

Pull processing involves pulling products from the consumer end (demand), rather than pushing them from the production end (supply).

t

T or F reports generated by the cost accounting system include performance reports and budget reports

t

T or F the philosophy of customer satisfaction permeates the world class firm

t

The complexities of ABC have caused many firms to abandon this method in favor of a simpler accounting model called value stream accounting.

t

Typically the only allocated cost in the value stream is a charge per square foot for the value stream production facility.

t

the bill of materials specifies the types and quantities of the raw materials and subassemblies used in producing a single unit of a finished product

t

the inventory control function updates and maintains both raw and furnished goods inventory subsidiary ledgers

t

the work in process file is the subsidiary ledger for the work in process control account

t