Chapter 14 The Production Cycle

Accounting Information Systems, 12e (Romney/Steinbart)
Chapter 14 The Production Cycle

1) 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.
Answer: A
Page Ref: 406
Objective: Learning Objective 1
Difficulty : Moderate
AACSB: Analytic

2) Which of the following is a key feature of materials requirements planning (MRP-II)?
A) Reducing required inventory levels by scheduling production, rather than estimating needs
B) Minimizing or eliminating carrying and stockout costs
C) Determining the optimal reorder points for all materials
D) Determining economic order quantity for all materials
Answer: A
Page Ref: 411
Objective: Learning Objective 1
Difficulty : Easy
AACSB: Analytic

3) The production cycle is different than the revenue and expenditure cycles for all the following reasons
except
A) there are no direct external data sources or destinations.
B) cost accounting is involved in all activities.
C) not all organizations have a production cycle.
D) very little technology exists to make activities more efficient.
Answer: A
Page Ref: 406
Objective: Learning Objective 1
Difficulty : Moderate
AACSB: Reflective Thinking

4) An MRP inventory system reduces inventory levels by
A) reducing the uncertainty about when materials are needed.
B) computing exact costs of purchasing and carrying inventory.
C) delivering materials to the production floor exactly when needed and in exact quantities.
D) none of the above
Answer: A
Page Ref: 411
Objective: Learning Objective 1
Difficulty : Easy
AACSB: Analytic
1
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

,5) Which of the following is not a product design objective?
A) Design a product that meets customer requirements.
B) Design a quality product.
C) Minimize production costs.
D) Make the design easy to track for cost accounting purposes.
Answer: D
Page Ref: 409
Objective: Learning Objective 1
Difficulty : Easy
AACSB: Analytic

6) 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
Answer: D
Page Ref: 410
Objective: Learning Objective 1
Difficulty : Easy
AACSB: Analytic

7) Push manufacturing is officially 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).
Answer: A
Page Ref: 411
Objective: Learning Objective 1
Difficulty : Easy
AACSB: Analytic

8) Pull manufacturing is officially 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).
Answer: B
Page Ref: 411
Objective: Learning Objective 1
Difficulty : Easy
AACSB: Analytic




2
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall

, 9) What is the main difference between MRP-II and JIT manufacturing systems?
A) The length of the planning horizon.
B) JIT uses long-term customer demand for planning purposes, but MRP-II uses short-term customer
demand for planning purposes.
C) MRP-II relies on EDI, but JIT does not.
D) There are no significant differences between MRP-II and JIT.
Answer: A
Page Ref: 411
Objective: Learning Objective 1
Difficulty : Moderate
AACSB: Analytic

10) A master production schedule is used to develop detailed
A) timetables of daily production and determine raw material needs.
B) reports on daily production and material usage.
C) daily reports on direct labor needs.
D) inventory charts.
Answer: A
Page Ref: 412
Objective: Learning Objective 1
Difficulty : Moderate
AACSB: Analytic

11) The production cycle document that specifies the quantity of each product to be produced and when
production should begin is the
A) bill of materials.
B) bill of lading.
C) master production schedule.
D) operations list.
Answer: C
Page Ref: 412
Objective: Learning Objective 1
Difficulty : Easy
AACSB: Analytic

12) What information is necessary to create the master production 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
Answer: D
Page Ref: 412
Objective: Learning Objective 1
Difficulty : Easy
AACSB: Analytic




3
Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall