AIS 7

Question 1

Transforms input resources, raw materials, labor, and overhead into finished products or services for sale​

Answer 1

The Conversion Cycle​

Question 2

the production system ​

Answer 2

Physical activities

Question 3

the cost accounting system​

Answer 3

Information activities

Question 4

Involves the planning, scheduling, and control of the physical product through the manufacturing process​

Answer 4

Production System

Question 5

creates a homogeneous product through a continuous series of standard procedures.​

Answer 5

Continuous Processing

Question 6

produces discrete groups (batches) of products. ​

Answer 6

Batch Processing

Question 7

involves the fabrication of discrete products in accordance with customer specifications.​

Answer 7

Make-to-Order Processing

Question 8

Materials and operations requirements ​

Production scheduling​

Answer 8

Production Planning and Control

Question 9

the difference between what is needed and what is available in inventory​

Answer 9

Materials requirement

Question 10

the assembly and/or manufacturing activities to be applied to the product​

Answer 10

Operations requirements

Question 11

Coordinates the production of multiple batches ​

Influenced by time constraints, batch size, and other specifications​

Answer 11

Production Scheduling

Question 12

Production operations begin when work centers obtain raw materials from storekeeping.​

It ends with the completed product being sent to the finished goods (FG) warehouse .​

Answer 12

Work Centers and Storekeeping​

Question 13

minimize total inventory cost while ensuring that adequate inventories exist of production demand​
Provides production planning and control with status of finished goods and raw materials inventory ​
Continually updates the raw material inventory during production process ​
Upon completion of production, updates finished goods inventory​

Answer 13

Inventory Control

Question 14

Very simple too use, but assumptions are not always valid​
-demand is known and constant​
-ordering lead time is known and constant​
-total cost per year of placing orders decreases as the order quantities increase​
-carrying costs of inventory increases as quantity of orders increases​
-no quantity discounts​

Answer 14

EOQ Inventory Model

Question 15

expected demand for the finished goods​

Answer 15

Sales Forecast

Question 16

production plan and authorization to produce​

Answer 16

Production Schedule

Question 17

specifies the types and quantities of the raw materials and subassemblies used to produce a single finished good unit​

Answer 17

Bill of Materials (BOM)

Question 18

details the production path a particular batch will take in the manufacturing process​

sequence of operations​

time allotted at each station

Answer 18

Route Sheet

Question 19

uses the BOM and route sheet to specify the exact materials and production processes for each batch​

Answer 19

Work Order

Question 20

records work done in each work center and authorizes the movement of the batch​

Answer 20

Move Ticket

Question 21

authorizes the inventory warehouse to release raw materials for use in the production process​

Answer 21

Materials Requisition

Question 22

Records the financial effects of the events occurring in the production process​

Initiated by the work order​

Cost accounting clerk creates a new cost record for the batch and files in WIP file​

The records are updated as materials and labor are used​

Answer 22

Cost Accounting System​

Question 23

reflect a legitimate need based on sales forecast and the finished goods on hand​

Answer 23

work orders

Question 24

signatures from each work station authorize the movement of the batch through the work centers​

Answer 24

move tickets

Question 25

authorize the warehouse to release materials to the work centers​

Answer 25

materials requisitions

Question 26

production planning and control department is separate from the work centers​ inventory control is separate from materials storeroom and finished goods warehouse​ cost accounting function accounts for WIP and should be separate from the work centers in the production process​

Answer 26

Segregation of duties​

Question 27

work center supervisors oversee the usage of raw materials to ensure that all released materials are used in production and waste is minimized​ employee time cards and job tickets are checked for accuracy​

Answer 27

Supervision​

Question 28

controlled access to storerooms, production work centers, and finished goods warehouses ​ quantities in excess of standard amounts require approval​

Answer 28

direct access to assets​

Question 29

controlled use of materials requisitions, excess materials requisitions, and employee time cards​

Answer 29

indirect access to assets​

Question 30

cost accounting reconciles material usage (material requisitions) and labor usage (job tickets) with standards ​ variances are investigated​

Answer 30

Independent verification​

Question 31

GL dept. verifies movement from WIP to FG by reconciling journal vouchers from cost accounting and inventory subsidiary ledgers from inventory control ​

Answer 31

Independent verification​

Question 32

internal and external auditors periodically verify the raw materials and FGs inventories through a physical count

Answer 32

Independent verification​

Question 33

continuously pursue improvements in all aspects of their operations, including manufacturing procedures​ are highly customer oriented​ have undergone fundamental changes from the traditional production model​ often adopt a lean manufacturing model​

Answer 33

World-Class Companies

Question 34

products are pulled from the consumer end (demand), not pushed from the production end (supply)​

Answer 34

Pull Processing

Question 35

pull processing requires zero defects in raw material, WIP, and FG inventories​

Answer 35

Perfect Quality

Question 36

activities that do not add value or maximize the use of scarce resources are eliminated

Answer 36

Waste Minimization

Question 37

hallmark of lean manufacturing​ Inventories cost money​ Inventories can mask production problems​ Inventories can precipitate overproduction​

Answer 37

Inventory Reduction

Question 38

reduce setup time to a minimum, allowing for a greater diversity of products, without sacrificing efficiency​

Answer 38

Production Flexibility

Question 39

late deliveries, defective raw materials, or incorrect orders will shut down production since there are inventory reserves​

Answer 39

Established Supplier Relations

Question 40

each employee must be vigilant of problems that threaten the continuous flow of the production line​

Answer 40

Team Attitude

Question 41

is based on flows through cells which shorten the physical distance between activities.​ This reduces setup and processing time, handling costs, and inventories.​

Answer 41

Reorganization

Question 42

Consists of many different types of machines which require a lot of setup time​ Machines and operators are organized in functional departments​ WIP follows a circuitous route through the different operations​

Answer 42

Traditional Approach to Automation ​

Question 43

Stand alone islands which employ computer numerical controlled (CNC) machines that can perform multiple operations with less human involvement​

Answer 43

Islands of Technology​

Question 44

Reduce the complexity of the physical layout​ Arranged in groups and in cells to produce an entire part from start to finish​ Need less set-up time​ ​

Answer 44

Computer Numerical Controlled (CNC ) Machines

Question 45

A completely automated environment which employs automated storage and retrieval systems (AS/RS) and robotics​

Answer 45

Computer Integrated Manufacturing (CIM) ​

Question 46

Replaces traditional forklifts and their human operators with computer-controlled conveyor systems ​ Reduce errors, improved inventory control, and lower storage costs​

Answer 46

Automated Storage and Retrieval Systems (AS/RS)​

Question 47

Use special CNC machines that are useful in performing hazardous, difficult, and monotonous tasks​

Answer 47

Robotics​

Question 48

Increases engineers’ productivity​ Improves accuracy​ Allows firms to be more responsive to market demands​ Interfaces with CAM and MRPII systems​

Answer 48

Computer-Aided Design (CAD)​

Question 49

Uses computers to control the physical manufacturing process​ Provides greater precision, speed, and control than human production processes​

Answer 49

Computer Aided Manufacturing (CAM)​

Question 50

automation changes the relationship between direct labor, direct materials, and overhead cost​

Answer 50

Inaccurate cost allocations

Question 51

incentives to produce large batches and inventories, and conceal waste in overhead allocations​

Answer 51

Promotes nonlean behavior

Question 52

data lag due to assumption that control can be applied after the fact to correct errors​

Answer 52

Time lag

Question 53

dollars as the standard unit of measure​

Answer 53

Financial orientation

Question 54

is an information system that provides managers with information about activities and cost objects​

Answer 54

Activity Based Costing (ABC)

Question 55

assumes that activities cause costs and that products (and other cost objects) create a demand for activities​

Answer 55

Activity Based Costing (ABC)…​

Question 56

is different from traditional accounting system since ABC has multiple activity drivers, whereas traditional accounting has only one, e.g. machine hours​

Answer 56

Activity Based Costing (ABC)

Question 57

all the steps in a process that are essential to producing a product​

Answer 57

Value stream

Question 58

Value streams cut across functions and departments​ Captures costs by value stream rather than by department or activity​ Simpler than ABC accounting​ Makes no distinction between direct and indirect costs​ Including labor costs​

Answer 58

Value Stream Accounting​

Question 59

Ensures adequate raw materials for production process​ Maintains the lowest possible level of inventory on hand​ Produce production and purchasing schedules and other information needed to control production​

Answer 59

Manufacturing Resources Planning (MRP)​

Question 60

An extension of MRP​ More than inventory management and production scheduling – it is a system for coordinating the activities of the entire firm​

Answer 60

MRP II​

Question 61

Huge commercial software packages that support the information needs of the entire organization, not just the manufacturing functions​

Answer 61

Enterprise Resource Planning (ERP) Systems

Question 62

Automates all business functions along with full financial and managerial reporting capability​

Answer 62

Enterprise Resource Planning (ERP) Systems​

Question 63

External communications with its customers and suppliers via Internet or direct connection​

Answer 63

Electronic Data Interchange (EDI)​