Acct 311 Exam 2

Work Order:

Draws from the BOM and route sheets to specify the materials and production for each batch

Materials Requisition

Authorizes the storekeeper to release materials to individuals or work centers in the production process in standard quantities

Give an example for each of the following activities in the conversion cycle: Transaction Authorization Segregation of Duties Access Control

Give an example for each of the following activities in the conversion cycle: Transaction Authorization: Move tickets are signed by supervisors and materials requisitions authorize storekeepers to release items Segregation of Duties: 1. Inventory control separate from RM and FG inventory custody 2. cost accounting separate from work centers 3. GL separate from other accoutning function Access Control: Direct access to assets (limited access to items and specific quantities of items)

-Continuous processing

-Continuous processing creates a homogenous product through a continuous series of standard procedures (i.e. used to make cement and pharmaceuticals)

What activities are involved in the batch processing system?

-Production Planning and Control -Materials and Operations Requirement -Production Scheduling -Work centers and Storekeeping -Inventory Control

What are the primary determinants for both materials and operations requirements

-The RM requirement for a batch of any given product is the difference between what is needed and what is available. The information comes from analysis of inventory on hand, sales forecast and the BOM -Production scheduling requires a master schedule of production derived from BOM and Route Sheets -Work centers and storekeeping are critical since employees need to get materials for their production in exchange for materials requisitions

What document signals the completion of the production process?

-The receipt of the last move ticket for the particular batch

What are the 3 objectives of inventory control in the production process?

-There are three main functions: 1. Status Reports on Finished goods and Raw Materials as well as excess 2. The inventory control function is continually involved in updating the raw material inventory records from material requisitions 3. Complete the production by updating finished goods inventory -You need to make sure that you have the least amount of inventory possible while still being able to meet demand

What documents are needed for cost accounting clerks to update work in process accounts with standard charges?

-WIP is adjusted by the standard cost file (which is based on job tickets and move tickets)

Move Ticket

: Records work done in each work center and authorizes the movement of the job or batch from one work center the next

Distinguish between activities and cost objectives in activity based costing.

Activates: Describe the work performed in a firm, prepare a purchase order, readying a product for shipping or operating a lathe Cost Object: Are the reasons for performing activities including products, services, vendors and customers?

-Batch processing

Batch processing produces a batch of product. Each item in a batch is similar and requires the same raw materials and conversion cycle (i.e. producing cars, household appliances and canned goods)

Sales Forecast

Expected demand

Define the Conversion Cycle

Includes both the physical and information activities related to manufacturing products for sale.

What functions should be separated to segregate record keeping from asset custody?

Inventory control maintains accounting records for RM and FG inventories, which is separate from the materials storeroom and FG warehouse -The cost accounting unction for WIP should be separate from the work centers

Made to order processing

Made to order processing involves fabrication of a discrete product in accordance with customer demands

What documents trigger and support batch processing?

Sales Forecast Production Schedule Bill of Materials: Route Sheet Work Order Move Ticket Materials Requisition

Bill of Materials

Specifies the type and quantities of the raw material and subassemblies used in producing a single unit of a finished product

Production Schedule

The formal plan and authorization to begin production (Specific quantities, inputs, time table etc.)

Route Sheet

The production path that a particular batch of products follows during production

Economic Order Quantity

Utilizing simplified assumptions to anticipate necessary inventory. Assume that there is a steady demand for product, lead times are constant, all inventories arrive at the same time, cost per year of placing order is variable, the total cost per year of holding inventories is variable and there are no quantity discounts

What document triggers the beginning of the cost accounting process for a given production?

When the production planning and control department sends a copy of the original work order