Chapter 7 Accounting Systems Questions

When one of the following statements is true?

MRP II evolved from MRP and MRP II evolved into ERP

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

True

ABC assigns cost to cost objects based on their use of activities.

True

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

True

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

True

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

True

Reports generated by the cost accounting system include performance reports and budget reports.

True

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

True

The complexities of ABC have caused many firms to abandon this method in favor of value stream accounting

True

The inventory control function updates and maintains both raw materials and finished goods inventory subsidiary ledgers

True

The objective of the economic order quantity model is to reduce total inventory costs by minimizing carrying costs and ordering costs.

True

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

True

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

True

Which statement is not true?

all world-class companies use ERP to integrate all company functions

Which of the following is not a principle of lean manufacturing?

products are pushed from the production end to the customer

Characteristics of lean manufacturing include all of the following except

push manufacturing

A move ticket

records the work done in each work center

Which of the following is not a problem associated with standard cost accounting?

standard costing discourages management from producing large batches of products and build inventory

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?

174

If the daily demand is 40 units and the lead time is 12 days, the reorder point is

480 units

Which of the following is not true regarding ABC?

ABC promotes the lean manufacturing philosophies of process simplification and waste elimination

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

False

A purchase requisition authorizes the storekeeper to release materials to individuals or work centers in the production process

False

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

False

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

False

Batch processing creates a homogenous product through a continuous series of standard procedures

False

Cement and petrochemicals are produced by the batch manufacturing method.

False

Computer-integrated manufacturing (CIM) focuses on reducing the complexity of the physical manufacturing layout of the shop floor.

False

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

False

Move tickets authorize the storekeeper to release materials to work centers.

False

The cost accounting system authorizes the release of raw materials into production

False

The only objective of the just-in-time philosophy is to reduce inventory levels

False

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

False

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. CORRECT ANSWER = D

Which of the following is not a problem with traditional accounting information?

a. managers in a lean setting require immediate information. b. standard costing motivates non-lean behavior in operations c. the measurement principle tends to ignore standards other than money d. all of the above are problems associated with traditional accounting information. CORRECT ANSWER = D

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. CORRECT ANSWER = D

All of the following are characteristics of batch processing except

batches are produced in accordance with detailed customer specifications

All of the following are documents in batch process production systems except

bill of manufacturing

An example of automation of manufacturing design is

computer-aided engineering

A manufacturing process that is organized into group technology cells utilizing no human labor is called

computer-integrated manufacturing

Which process creates a homogenous product through a continuous series of standard procedures?

continuous process

Which statement is not correct?

cost object describes the work performed in a firm

Which statement is not correct?

general ledger creates a new cost record upon receipt of a work order from production planning and control

The internal control significance of the excess materials requisition is that it

identifies materials used in production that exceed the standard amount allowed

Deficiencies of the traditional cost accounting information system include all of the following except

immediate feedback about deviations from the norm

Which statement is not correct?

inventories provide a competitive advantage

Which situation violates the segregation of functions control procedure?

inventory control maintains custody of inventory items

Firms are abandoning activity-based costing (ABC) because

it is complex and time consuming

An example of automation of manufacturing planning is

materials requirements planning

Computer integrated manufacturing includes all of the following technologies except

materials requirements planning

The storekeeper releases raw materials based on the

materials requisition

An example of a continuous process is the production of

milk products

Which function is not a part of the batch production process?

prepare purchase orders

Inventory control performs all of the following tasks except it

prepares a materials requisition for each production batch

The cost of poor quality includes all of the following except

proceeds from the sale of scrap

All of the following are internal control procedures that should be in place in the conversion cycle except

retention of excess materials by work centers

A flexible manufacturing system

shortens the physical distance between activities

The production schedule is

the formal plan and authority to begin production

Which of the following statements about the EOQ inventory model assumptions is incorrect?

the lead time is a variable

Lead time times daily demand is

the reorder point

Transaction authorization occurs in a traditional manufacturing environment in all of the following except

the sales department modifies work orders to match changes in demand

Which of the following is not an assumption of the economic order quantity model?

total cost per year of placing order is fixed

The philosophy of customer satisfaction permeates the world-class firm.

true

Which of the following is not true?

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

Firms hold safety stock to compensate for

variations in lead time or daily demand