IS 414 CH. 14 (System and Threats)

Question 1

4 Basic Process

Answer 1

1. Product design
2. Planning and scheduling
3. Production operations
4. Cost Accounts

Question 2

Product design

Answer 2

Create product that meets customer requirements in terms of quality, durability, and functionality while minimizing production costs

Creates two outputs: bill of materials and operations list

Question 3

Product design Threats

Answer 3

4. Poor design
5. 1 Accounting analysis of costs arising from product design choices
6. 2 Analysis of warranty and repair costs to identify primary causes of product failure and suggest opportunities to resign products to improve quality

Question 4

Planning and scheduling

Answer 4

Develop a production plan efficient enough to meet existing orders and anticipate short term demand while minimizing inventories of both raw materials and finished goods

Methods of production planning: Lean manufacturing and manufacturing resource planning (MRP-II)

Information about customer orders, sales forecasts, and inventory levels of finished good is used to determine production levels. The result is master production schedule (MPS)

Produces 3 Documents: production order, materials requisition, and move tickets

Question 5

production order

Answer 5

A document authorizing the manufacture of a specified quantity of a particular product. It lists the operations that need to be performed, the quantity to be produced, and the location where the finished product should be delivered

Question 6

Materials Requisition

Answer 6

Authorizes the removal of the necessary quantity of raw materials from the storeroom to the factory location where they will be used. Contains the production order number, date of issue, and based on the bill of materials, the part numbers and quantities of all necessary raw materials

Question 7

Planning and scheduling Threats

Answer 7

5. Over and under production
6. 1 Production planning systems
7. 2 Review and approval of production schedules and orders
8. 3 Restriction of access to product orders and production schedules to eliminate risk of unauthorized production orders

Question 8

Production operations threats

Answer 8

6. Theft of inventory
7. 1 Physical access controls
8. 2 Documentation of all inventory movement
9. 3 Segregation of duties
10. 4 Restriction of access to master inventory data
11. 5 Periodic physical counts of inventory and reconciliation of those counts to recorded quantities
12. Theft of fixed assets
13. 1 Physical inventory of all fixed assets to be identified and recorded
14. 2 Restriction to Physical access of fixed assets
15. 3 Maintaining detailed records of fixed assets, including disposal

Question 9

Production operations threats (cont..)

Answer 9

8. Poor performance
9. 1 Training
10. 2 Performance reports
11. Suboptimal (of less than the highest standard or quality) investment in fixed assets
12. 1 Proper approval of fixed-asset acquisitions, including use of requests for proposals to solicit multiple competitive bids
13. Loss of inventory or fixed asset due to fire or other disaster
14. 1 Physical safeguards (fire sprinklers)
15. 2 Insurance
16. Disruption of operations
17. 1 Backup and disaster recovery plan

Question 10

Cost accounting threats

Answer 10

12. Inaccurate cost data
13. 1 Source data automation (RFID, scanners, readers, etc)
14. 2 Data processing integrity controls
15. Inappropriate allocation of overhead costs
16. 1 Time-driven activity based costing
17. Misleading reports
18. 1 Innovative performance metrics (throughput)

Question 11

Cost Accounting

Answer 11

Objectives:

1. provide info for planning, controlling, and evaluation the performance of production operations
2. provide accurate cost data about products for use in pricing and product mix decisions
3. Collect and process the info used to calculate the inventory and COGS values that appear in the company’s financial statements