CH:14 The Production Cycle

Question 1

Production cycle process

Answer 1

• product design source document: “bill of material , operation list “
• planning and scheduling source document: “Master production schedule , production order and material requisition “
• product operation
• cost accounting

Question 2

threats and controls of production cycle

Answer 2

Threats :
-Inaccurate/invalid master data
-loss or destruction of data
Controls:
-data processing integrity 
-Restrict access to master data

Question 3

Product design

Answer 3

• create a product that meets a customer requirements
• bills of material : specifies part number , description , quantity of each component
• operation list: specifies the sequence of steps to follow in making a product

Question 4

Planning and Scheduling

Answer 4

documents from planning and scheduling :

• production order
• material requisition
• move tickets

Question 5

2 types of production planning

Answer 5

• Manufacturing resource planning (MRP-II):”push” goods are produced in expectation of demand
• Lean manufacturing : “pull” goods are produced in response to customer demand

Question 6

• product design

- planning and scheduling threats and controls

Answer 6

Threats :
-poor product design resulting in excess costs
-over and under production
Controls:
-restrict access to orders and schedules
-analysis of warranty and repair costs

Question 7

Production operations Threats and controls

Answer 7

Threats :
-Inventory theft 
-poor performance 
Controls:
-restrict physical access 
-performance reporting

Question 8

Cost Accounting Systems

Answer 8

• provide info for planning , controlling and evaluating the performance of production operations
• Provide accurate cost data about products in use pricing and product mix decisions
• collect and process the information used to calculate the inventory and cogs values that appear in org’s fiancials

Question 9

three principal objectives that cost accounting achieve

Answer 9

-collect data about performance and production activities
-to accomplish the last 2 objectives requires an org to classify and assign costs and the the types of costs collected and classified are :
-Raw material usage
-Direct labor costs
-machinery and equipment usage
-manufacturing overhead costs
-Assigning costs ways :
-job order costing: costs assigned to a specific production job or batch
-Processing costing: costs assigned to each process in the production cycle and average for all units produced
-Activity based costing :tracing costs to the activity
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Question 10

Cost Accounting Threats and controls

Answer 10

Threats :
-Inaccurate cost data 
-misleading reports 
Controls:
-Source automation 
-Data processing integrity controls