Chapter 14 - Review Questions (Production Cycle)
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1. Most costs are locked in at
which stage in the
production cycle?
a. product design
b. production planning
c. production operations
d. cost accounting
2. Which of the following is
an advantage of bar-
coding over RFID?
a. speed
b. accuracy
c. cost
d. safety
3. Which document lists the
components needed to
manufacture a specific
product?
a. operations list
b. master production
schedule
c. bill of materials
d. production order
4. Which document captures
information about labor
used in production?
a. move ticket
b. job-time ticket
c. operations list
d. bill of materials
5. An increase in which
component of quality costs
is most likely to result in a
decrease in the other three
components?
a. prevention costs
b. inspection costs
c. internal failure costs
d. external failure costs
a. product design
(Correct. Decisions made
during product design
determine the majority of
costs.)
c. cost
(Correct. Bar-coding is
currently less expensive than
RFID.)
c. bill of materials
(Correct. The bill of materials
lists the components of a
finished product.)
b. job-time ticket
(Correct. The job-time ticket
records time spent on each
activity.)
a. prevention costs
(Correct. Increases in
prevention costs often reduce
the time and cost of inspecting
products, as well as the
proportion of defective
products.)
6. Activity-based costing can be c. both job-order and
used to refine which of the process costing
following?
(Correct. Activity-based
a. job-order costing costing can be used with
b. process costing either job-order or process
c. both job-order and process costing.)
costing
d. neither job-order nor
process costing
7. Which system is most likely a. MRP-II
to be used by a company that
mass-produces large batches (Correct. MRP-II is a push
of standard items in form of manufacturing that is
anticipation of customer appropriate for mass
demand? production of standardized
items for which demand is
a. MRP-II predictable.)
b. lean manufacturing
c. activity-based costing
d. throughput
8. The development of an MPS d. excess production
would be most effective in
preventing which of the (Correct. An MPS schedules
following threats? production to satisfy
demand and, therefore,
a. recording and posting reduces the chance of
errors overproduction.)
b. loss of inventory
c. production of poor-quality
goods
d. excess production
9. Which control procedure is c. regular materials usage
probably least effective in reports that highlight
reducing the threat of variances from standards
inventory loss?
(Correct. Although variances
a. limiting physical access to could indicate theft, they are
inventory more likely to reflect
b. documenting all transfers changes in efficiency.)
of inventory within the
company
c. regular materials usage
reports that highlight
variances from standards
d. periodically counting
inventory and investigating
any discrepancies between
those counts and recorded
amounts
10. What is the number of good units d. throughput 15. Job order costing would be most c. the products are
produced in a given period of time appropriate when discretely
called? (Correct. identifiable.
Throughput is the a. a product is homogeneous.
a. productive capacity measure of the b. it is mass-produced.
b. productive processing time number of good c. the products are discretely
c. yield units produced per identifiable.
d. throughput unit of time.) d. Both 1 and 2.
e. All of the above.
11. Which of the following is NOT an f. None of the
objective of cost accounting? above. 16. Which of the following threats is c. Poor performance
related the production operation
a. provide information for planning activity in the production cycle?
b. provide information for evaluating
performance a. Poor product design resulting in
d. collect and process information excess costs
used to calculate inventory b. Inaccurate cost data
e. collect and process information include direct labor costs
used to calculate cost of goods sold c. Poor performance
f. None of the above. d. None of the above.
12. Cost accounting plays what role in a. Provides 17. Which of the following controls e. All of the above.
the production cycle? information about and/or devices are used to
product pricing safeguard inventories?
a. Provides information about product
pricing a. RFID tags
b. Assists managers determine how b. Access controls
many items produced will be sold c. Bar code scanners
c. Conducts environmental scans to d. None of the above.
determine the strength of an entity's e. All of the above.
competition
18. Threats in the production cycle do e. All of the above.
d. All of the above.
not include:
e. None of the above.
13. Which of the following documents b. Materials a. inaccurate data.
authorize the removal of raw Requisition b. poor performance.
materials inventory from the c. theft of fixed assets.
storeroom to a factory location where d. disruption of operations.
it will be put into production? e. All of the above.
19. Which of the following is (are) a valid c. Allocate overhead
a. Production order
statement about ABC systems? costs through the use
b. Materials Requisition
of multiple cost
c. Move ticket
a. ABC systems are more efficient drivers.
d. Picking ticket
than the traditional method in
e. None of the above.
allocating direct material costs to
14. Which of the following would NOT be f. All of the above products.
included in manufacturing overhead? would be included b. ABC systems are more efficient
in manufacturing than the traditional method in
a. Quality control costs overhead. allocating direct labor costs to
b. Power products.
c. Rent c. Allocate overhead costs through
d. Property taxes the use of multiple cost drivers.
e. Insurance d. None of the above
f. All of the above would be included
in manufacturing overhead.
20. Quality control costs do NOT include: e. opportunity
costs.
a. prevention costs.
b. inspection costs.
c. internal failure costs.
d. external failure costs.
e. opportunity costs.
21. Which of the following controls best addresses the threat of inaccurate cost data? e. Source data
automation
a. Analysis of warranty and repair costs
b. Documentation of all inventory movement
c. Production planning systems
d. Training
e. Source data automation
22. Costs tracked in the production cycle include e. All of the
above.
a. raw materials.
b. indirect labor.
c. machinery and equipment.
d. direct labor.
e. All of the above.
23. Product Planning is the first step in production cycle. b. False

a. True
b. False
24. Process costing would be applied to mass produced items because it would not be cost effective to trace a. True
product costs to each individual item produced.

a. True
b. False
25. The analysis of warranty and repair costs is a proper control for the threat of poor product design resulting a. True
in excess costs.

a. True
b. False
26. Activity Based Costing is an appropriate mechanism for allocating overhead for all entities. b. False

a. True
b. False
27. Because equipment is generally a large, easily identifiable asset, no recording and tracking internal controls b. False
are necessary.

a. True
b. False