Complete
Solutions for Accounting Information System 12e by Marshall B. Romney Paul J. Steinbart
IF You Want To Purchase A+ Work Then Click The Link
Below , Instant Download
CHAPTER 14
THE PRODUCTION CYCLE
14.1. When activity-based cost reports
indicate that excess capacity exists, management should either find alternative
revenue-enhancing uses for that capacity or eliminate it through
downsizing. What factors influence management’s decision? What are
the likely behavioral side effects of each choice? What implications do
those side effects have for the long-run usefulness of activity-based cost
systems?
14.2. Why should accountants
participate in product design? What insights about costs can accountants
contribute that differ from the perspectives of purchasing managers and
engineers?
14.3. Some companies have eliminated
the collection and reporting of detailed analyses on direct labor costs broken
down by various activities. Instead, first-line supervisors are
responsible for controlling the total costs of direct labor. The
justification for this argument is that labor costs represent only a small
fraction of the total costs of producing a product and are not worth the time
and effort to trace to individual activities. Do you agree or disagree with
this argument? Why?
14.4. Typically, McDonald’s produces
menu items in advance of customer orders based on anticipated demand. In
contrast, Burger King produces menu items only in response to customer
orders. Which system (MRP-II or lean manufacturing) does each company
use? What are the relative advantages and disadvantages of each system?
14.5 Some companies have switched from a
“management by exception” philosophy to a “continuous improvement”
viewpoint. The change is subtle, but significant. Continuous
improvement focuses on comparing actual performance to the ideal (i.e.,
perfection). Consequently, all variances are negative (how can you do
better than perfect?). The largest variances indicate the areas with the
greatest amount of “waste,” and, correspondingly, the greatest opportunity for
improving the bottom line. What are the advantages and disadvantages of
this practice?
14.1. Match the terms in the left column with
their definitions from the right column:
|
1 Bill of materials
|
a. A factor that
causes costs to change.
|
|
2. Operations
list
|
b. A measure of
the number of good units produced in a period of time.
|
|
3. Master
Production Schedule
|
c. A list of the
raw materials used to create a finished product.
|
|
4. Lean
manufacturing
|
d. A document
used to authorize removal of raw materials from inventory.
|
|
5. Production
order
|
e. A
cost-accounting method that assigns costs to products based on specific
processes performed.
|
|
6. Materials
requisition
|
f. A cost
accounting method that assigns costs to specific batches or production runs
and is used when the product or service consists of uniquely identifiable
items.
|
|
7. Move ticket
|
g. A cost
accounting method that assigns costs to each step or work center and then
calculates the average cost for all products that passed through that step or
work center.
|
|
8. Job-time
ticket
|
h. A document
that records labor costs associated with manufacturing a product.
|
|
9. Job-order
costing
|
i. A
document that tracks the transfer of inventory from one work center to
another.
|
|
10. Cost driver
|
j. A document
that authorizes the manufacture of a finished good.
|
|
11. Throughput
|
k. A document
that lists the steps required to manufacture a finished good.
|
|
12. Computer-integrated
manufacturing
|
l. A document
that specifies how much of a finished good is to be produced during a
specific time period.
|
|
|
m. A production
planning technique that is an extension of the just-in-time inventory control
method.
|
|
|
n. A production
planning technique that is an extension of the Materials Requirement Planning
inventory control method.
|
|
|
o. A term used to
refer to the use of robots and other IT techniques as part of the production
process.
|
14.2 What internal control procedure(s)
would best prevent or detect the following problems?
a. A production order was initiated for a product
that was already overstocked in the company’s warehouse.
b. A production employee stole items of work-in-process
inventory.
c. The “rush-order” tag on a partially completed
production job became detached from the materials and lost, resulting in a
costly delay.
d. A production employee entered a materials
requisition form into the system in order to steal $300 worth of parts from the
raw materials storeroom.
e. A production worker entering job-time data on an
online terminal mistakenly entered 3,000 instead of 300 in the
“quantity-completed” field.
f. A production worker entering job-time data
on an online terminal mistakenly posted the completion of operation 562 to
production order 7569 instead of production order 7596.
g. A parts storeroom clerk issued parts in
quantities 10% lower than those indicated on several materials requisitions and
stole the excess quantities.
h. A production manager stole several expensive
machines and covered up the loss by submitting a form to the accounting
department indicating that the missing machines were obsolete and should be
written off as worthless.
i. The quantity-on-hand balance for a key
component shows a negative balance.
j. A factory supervisor accessed the
operations list file and inflated the standards for work completed in his
department. Consequently, future performance reports show favorable budget
variances for that department.
k. A factory supervisor wrote off a robotic assembly
machine as being sold for salvage, but actually sold the machine and pocketed
the proceeds.
l. Overproduction of a slow-moving product resulted
in excessive inventory that had to eventually be marked down and sold at a
loss.
14.3 Use Table 14-1 to create a
questionnaire checklist that can be used to evaluate controls for each of the
basic activities in the production cycle (product design, planning and scheduling,
production operations, and cost accounting).
a. For each control issue, write a Yes/No question
such that a “No” answer represents a control weakness.
b. For each Yes/No question, write a brief
explanation of why a “No” answer represents a control weakness.
14.4 You have recently been hired as the
controller for a small manufacturing firm that makes high-definition
televisions. One of your first tasks is to develop a report measuring
throughput.
Describe the data required to measure throughput and the most
efficient and accurate method of collecting that data.
14.5 The Joseph Brant Manufacturing
Company makes athletic footwear. Processing of production orders is as
follows: At the end of each week, the production planning department prepares a
master production schedule (MPS) that lists which shoe styles and quantities
are to be produced during the next week. A production order preparation
program accesses the MPS and the operations list (stored on a permanent disk
file) to prepare a production order for each shoe style that is to be
manufactured. Each new production order is added to the open production
order master file stored on disk.
Each day, parts department clerks review the open production
orders and the MPS to determine which materials need to be released to
production. All materials are bar-coded. Factory workers work
individually at specially designed U-shaped work areas equipped with several
machines to assist them in completely making a pair of shoes. Factory
workers scan the bar-codes as they use materials. To operate a machine,
the factory workers swipe their ID badge through a reader. This results
in the system automatically collecting data identifying who produced each pair
of shoes and how much time it took to make them.
Once a pair of shoes is finished, it is placed in a box.
The last machine in each work cell prints a bar-code label that the worker
affixes to the box. The completed shoes are then sent to the warehouse.
14.6 The XYZ company’s current production
processes have a scrap rate of 15% and a return rate of 3%. Scrap costs
(wasted materials) are $12 per unit; warranty/repair costs average $60 per unit
returned. The company is considering the following alternatives to
improve its production processes:
§ Option A: Invest $400,000
in new equipment. The new process will also require an additional $1.50
of raw materials per unit produced. This option is predicted to reduce
both scrap rates return rates by 40% from current levels.
§ Option B: Invest $50,000 in
new equipment, but spend an additional $3.20 on higher quality raw materials
per unit produced. This option is predicted to reduce both scrap and
return rates by 90% from current levels.
§ Option C: Invest
$2,000,000 in new equipment. The new process will require no change in
raw materials. This option is predicted to reduce both scrap and return
rates by 50% from current levels.
1. Assume that current
production levels of 1,000,000 units will continue. Which option do you
recommend? Why?
1. Assume that because all
of the proposed changes will increase product quality, that production will
jump to 1,500,000 units. Which option do you recommend? Why?
14.7 Excel Problem
1. Create the following
spreadsheet
1. Create formulas to
calculate
§ Accumulated depreciation
(all assets use the straight line method; all assets acquired any time during
the year get a full year’s initial depreciation)
§ Current year’s
depreciation (straight-line method, full amount for initial year in which
asset acquired)
§ Ending accumulated depreciation
§ Net book value at end of
period
§ Current year in the cell
to the right of the phrase “Depreciation schedule for year”
§ Column totals for
acquisition cost, beginning depreciation, current depreciation, ending
accumulated depreciation, net book value
§ In the cell to the right
of the arrow following the text “Cross-footing test” create a formula that
checks whether the sum of the net book value column equals the sum of
acquisition costs minus the sum of ending accumulated depreciation. If
the two values match, the formula should display the text “Okay” otherwise it
should display the text “Error”
c. Create a table at the bottom of your worksheet
that consists of two columns:
§ Asset name (values should
be chair, desk, laptop, monitor, software, and workstation)
§ Net book value (create a
formula to calculate this number) assuming that the current date is 06/30/2010
§ Create a formula that
sums the total net book values for all classes of assets
§ In the cell to the right
of the total net book values for all asset classes, create a formula that
compares the total net book values for all classes of assets to the sum of all
net book values in the top portion of the spreadsheet. The formula should
return “Okay” if the two totals match or “Error: Sum of net book values by
asset class does not equal sum of all net book values” if the two totals do not
equal one another.
1. Enter your name in row 1
in the cell to the right of the text “Name”
14.8 Excel Problem
Task: Use Excel and the Solver add-in to explore the effect of
various resource constraints on the optimal product mix.
a. Read the article “Boost Profits With Excel,” by
James A. Weisel in the December 2003 issue of the Journal of Accountancy (available online at the
AICPA’s Web site, www.aicpa.org
b. Download the sample spreadsheet discussed in the
article and print out the screenshots showing that you used the Solver tool as
discussed in the article.
|
|
|
|
|
|
c. Rerun the Solver program to determine the effect
of the following actions on income (print out the results of each option):
§ double market share
limitations for all three products
14.9 EXCEL PROBLEM
Create the spreadsheet shown in Figure 14-11. Write formulas
to calculate the total depreciation expense and to display the correct values
in the following three columns: Age, Depreciation Rate, and Depreciation
Expense. (Hint: You will need to use the
VLOOKUP and MATCH functions to do this. You may also want to read the
article “Double-Teaming In Excel,” by Judith K. Welch, Lois S. Mahoney,
and Daniel R. Brickner, in the November 2005 issue of the Journal of Accountancy, from which this problem was
adapted).
No comments:
Post a Comment