AIS-Chapter 14

1. 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

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

1. 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

1. 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

1. 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.

The following are the basic activities in the production cycle: 1. Production operations 2. Product design 3. Cost accounting 4. Planning and scheduling Which of the following is the correct sequence of the basic activities?

Product Design, Planning and Scheduling, Production, Cost Accounting

The best control procedure to ensure that data entry is accurate is to automate data collection using:

RFID technology and badge readers (A and B).

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?

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.

__________ links costs to 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

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.

. Information found on the materials requisition form is based in part on information obtained from which other form? a) a bill of materials. b) a move ticket. c) a production order. d) a picking list.

a) a bill of materials.

Inaccurate recording and processing of production activities can diminish the overall effectiveness of production operations. One of the application controls that can help to ensure accounting records are accurate is to restrict the rights of authorized users only to the portion of the database needed to complete job duties. What specific control can help achieve this objective? a) an access control matrix b) passwords and user IDs c) closed-loop verification d) bar-code scanners

a) an access control matrix

A master production schedule is used to a) develop detailed timetables of daily production and determine raw material purchasing. b) develop detailed reports on daily production and material usage. c) develop daily direct labor needs. d) develop detailed inventory charts.

a) develop detailed timetables of daily production and determine raw material purchasing.

. 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

The second step in the production cycle is planning and scheduling. One of the methods of production planning is referred to as push manufacturing. This method 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).

The accountant's role in the __________ step of production cycle activities is to understand how CIM affects the AIS. a) production operations b) product design c) planning and scheduling d) cost accounting methods

a) production operations

MRP-II and JIT manufacturing systems both plan production in advance. What is the main difference between these two systems? a) the length of the planning horizon b) JIT uses long-term customer demand for planning purposes c) MRP-II relies on EDI d) There are no differences between the two systems.

a) the length of the planning horizon

Quality control problems and inefficiencies in production operations will most likely result in increased expenses. The AIS can produce a measure of throughput to quantify and measure the number of "good" units produced in a time period. 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 percentage of "bad" units produced given current technology

a) the maximum number of units that can be produced given current technology

__________ 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

What may be perceived as a drawback of using an activity-based costing (ABC) system? a) The ABC system may provide more accurate data results. b) The ABC system may help to establish a better product mix. c) The ABC system may improve management's ability to control total costs. d) The ABC may cost more to run and be more complex in nature.

b) The ABC system may help to establish a better product mix.

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.

An integral part of the production process is the use of raw materials. One way to enable an AIS to efficiently track and process information about raw materials used in production is to implement __________. a) a just-in-time inventory system b) bar coding c) a materials resources planning inventory system d) job-order costing

b) bar coding

. Job-time tickets are used to a) specify each production task. b) collect the time spent by a worker on a specific task. c) allocate machine costs. d) All of the above are correct.

b) collect the time spent by a worker on a specific task

Activity-based costing (ABC) can refine and improve cost allocations using either job-order or process cost systems. There are three significant differences between ABC and traditional cost accounting approaches. One difference between the two systems is how clearly the results of management activities are measured on overall profitability. This benefit is better known as a) batch related overhead. b) improved cost management. c) product related overhead. d) improved cost drivers.

b) improved cost management

Which of the following is not a type of cost accounting system? a) activity-based costing b) just-in-time costing c) job order costing d) process costing

b) just-in-time costing

The second step in the production cycle is planning and scheduling. One of the methods of production planning is referred to as pull manufacturing. This method 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).

. A __________ authorizes the transfer of raw goods needed for production from the storeroom to the production facilities. a) master production schedule b) materials requisition c) move ticket d) production order

b) materials requisition

Overproduction or underproduction can be a threat to an organization. To which process or activity does this threat relate? a) product design b) planning and scheduling c) production operations d) cost accounting

b) planning and scheduling

Throughput is a measure of a) production yield. b) production effectiveness. c) production capacity. d) production quality.

b) production effectiveness

Whether a company uses an AIS, ERP, or incorporates some degree of CIM into its production process, it still needs to collect data about four basic facets of its production operations. The facet that impacts the company's human resource cycle the most is a) the amount of raw material used in a production order. b) the labor hours expended to complete a production order. c) the machine operations performed during a production order. d) the tracking of manufacturing overhead costs incurred for a production order.

b) the labor hours expended to complete a production order.

__________ represent testing to identify defective units before they are ready for sale. a) External failure costs b) Inspection costs c) Internal failure costs d) Prevention costs

c) Internal failure costs

. The document that authorizes the removal of the necessary quantity of raw materials from storeroom to factory is referred to as a) a bill of materials. b) a production order. c) a materials requisition. d) a move ticket

c) a materials requisition.

The general threat of the loss of production data can greatly slow or halt production activity within an organization. To counteract such a major threat, which of the following organization controls should be implemented and maintained? 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

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.

Activity-based costing (ABC) can refine and improve cost allocations using either job-order or process cost systems. There are three significant differences between ABC and traditional cost accounting approaches. An ABC system attempts to identify anything that has a cause-and-effect relationship on costs. This cause-andeffect relationship is known as a a) cost stimulator. b) overhead stimulator. c) cost driver. d) cost catalyst.

c) cost driver.

Manufacturing overhead consists of all manufacturing costs that are not economically feasible to trace directly to specific jobs or processes. Which of the costs below would not be considered an overhead cost? a) utilities b) rent c) earnings of factory production employees d) salaries of factory production supervisors

c) earnings of factory production employees

. The type of cost accounting system that primarily assigns costs to specific batches, or jobs, and is used where production items can be discretely identified is known as __________ cost accounting. a) just-in-time b) process c) job-order d) manufacturing resources

c) job-order

The form in the production cycle that specifies how much of each product is to be produced during the planning period and when product should begin is the a) bill of materials. b) bill of lading. c) master production schedule. d) operations list.

c) master production schedule.

A __________ is used to document the subsequent relocation of materials through the factory for manufacturing in process. a) master production schedule b) materials requisition c) move ticket d) production order

c) move ticket

Factory supervisory costs would be assigned to departments for a) product-mix decisions. b) pricing decisions. c) performance evaluation purposes. d) All of the above are correct.

c) performance evaluation purposes.

Detailed data about 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.

There are four basic activities in the production cycle. The step that may incorporate robots and computer-controlled machinery to achieve its goals is a) product design. b) planning and scheduling. c) production operations. d) cost accounting

c) production operations

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.

The basic activities in the production cycle are a) product design and production operations. b) planning, scheduling, and cost accounting. c) raw materials requisitioning, planning, and scheduling. d) Both A and B are correct

d) Both A and B are correct.

A company's production process may incorporate various forms of information technology such as robots and computer-controlled machinery. One effect of using such a process is a shift from mass production to custom order manufacturing. This process is called a) ERP. b) CRM. c) AIS. d) CIM

d) CIM.

There are several criticisms of traditional cost accounting systems. One criticism is that the traditional cost system uses a volume-driven base, such as direct labor or machine hours, to apply overhead to products. What is the drawback to the use of such a measurement 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.

. __________ 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

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

The bill of materials shows the __________ of each product component. a) part number and description b) quantity used c) quantity ordered d) both A and B

d) both A and B

An AIS should be designed to provide timely and accurate information about production cycle activities that impact the other business cycles. One type of information deals with planning and controlling manufacturing costs and evaluating performance. This type of information is called a) product mix. b) product pricing. c) resource allocation. d) cost management.

d) cost management.

To curtail the threat of theft or destruction of inventories and other fixed assets, the organization may wish to implement which of the following controls? a) review and approval of fixed asset acquisitions b) improved and timelier 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

There are various costs associated with quality control, or its absence in a production operation. Such information can help a company determine the effects of actions taken to improve production and identify areas of improvement. 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.

. 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

The list which specifies the labor and machine requirements needed to manufacture a product is called the a) bill of materials. b) bill of lading. c) master production schedule. d) operations list.

d) operations list.

What document authorizes the manufacturing of a product? a) master production schedule b) materials requisition c) move ticket d) production order

d) production order

The production planning department develops the master production schedule based on information from several sources. What information is necessary to create this 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

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) the automation of data collection.

d) the automation of data collection.

The first step in the production cycle is product design. There are several objectives connected with this step. Which objective below is not a product design objective? a) to design a product that meets customer requirements b) to design a quality product c) to minimize production costs d) to make the design easy to track for cost accounting purposes

d) to make the design easy to track for cost accounting purposes

The final step in the production cycle is the cost accounting function. There are several principal objectives of the cost accounting system. Which objective listed below is not a principal cost accounting objective? a) to provide information for planning, controlling, and evaluating the performance of production operations b) to provide cost data about products used in pricing and product mix decisions c) to collect and process the information used to calculate inventory and cost of goods sold amounts that appear in the financial statements d) to provide tests of audit control functions as part of the AIS

d) to provide tests of audit control functions as part of the AIS

___________ __________documents the transfer of raw material throughout the factory.

moving ticket

Accurate and current sales forecasts are a control for dealing with

over - or underproduction

A production planning method that is based on goods being produced based on customer demand is:

pull manufacturing