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91 Cards in this Set
- Front
- Back
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The conversion cycle transforms what 4 things into what 2 things?
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input resources, raw materials, labor, and overhead; finished products or services for sale
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The conversion cycle consists of what 2 subsystems?
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physical and information activities
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What is the physical activities subsystem?
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the production system
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What is the information activities subsystem?
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the cost accounting system
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The production system involves what three steps of the physical product through the manufacturing process?
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planning, scheduling, and control
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What are 4 things the production system does?
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determines raw materials requirements, authorizes the release of raw materials into production, authorizes work to be conducted in the production process, directs the movement of work through the various stages of production
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What are the 3 production methods?
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continuous processing, batch processing, make-to-order processing
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Which production method produces discrete groups of products?
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batch
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Which production method involves the fabrication of discrete products in accordance with customer specifications?
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make-to-order
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Which production method creates a homogeneous product through a continuous series of standard procedures?
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continuous
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Traditional batch production model consists of what four basic processes?
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plan and control production, perform production operation, maintain inventory control, perform cost accounting
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What are two parts of production planning and control in batch production system?
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materials and operations requirements; production scheduling
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What requirement in batch is the difference between what is needed and what is available in inventory?
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materials
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What requirement in batch is the assembly and/or manufacturing activities to be applied to the product?
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operations
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What part of the batch production system coordinates the production of multiple batches? What is it influenced by?
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production scheduling; time constraints, batch size, and other specifications
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When do production operations begin in batch? When does it end?
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when work centers obtain raw materials from storekeeping; when completed product is sent to the finished goods warehouse
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What is the objective of inventory control in batch production?
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minimize total inventory costs while ensuring that adequate inventories exist of production demand
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What are three functions of inventory control?
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provides production planning and control with status of finished goods and raw materials inventory; continually updates raw material inventory during production process; upon completion of production, updates finished goods inventory
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5 subsystems of batch production system?
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production planning and control, materials and operations requirements, production scheduling, work centers and storekeeping, and inventory control
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EOQ Inventory Model: advantage and disadvantage? Demand? Ordering lead time? Total cost per year of placing orders? Carrying costs of inventory? Quantity discounts?
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very simple to use but assumptions are not always valid; demand known and constant; known and constant; decreases as order quantities increase; increases as quantity of orders increases; none
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7 documents in the batch production system-information:
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sales forecast, production schedule, bill of materials (BOM), route sheet, work order, move ticket, materials requisition
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What document for batch is the production plan and authorization to produce?
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production schedule
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What document for batch uses the BOM and route sheet to specify the exact materials and production processes for each batch?
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work order
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What document for batch records work done in each work center and authorizes the movement of the batch?
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move ticket
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What document for batch specifies the types and quantities of the raw materials and subassemblies used to produce a single finished good unit?
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bill of materials (BOM)
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What document for batch shows the expected demand for the finished goods?
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sales forecast
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What document for batch details the production path a particular batch will taken in the manufacturing process? Two parts?
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route sheet; sequence of operations, time allotted at each station
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What document for batch authorizes the inventory warehouse to release raw materials for use in the production process?
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materials requisition
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What's a type of batch?
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EOQ Inventory Model
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What records the financial effects of the events occurring in the production process?
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cost accounting system
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The cost accounting system is initiated by what? What does the cost accounting clerk do? When are records updated?
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work order; creates a new cost record for the batch and files in WIP file; as materials and labor are used
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In the cost accounting system, what signals completion of the production rocess? What do things does the clerk do?
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receipt of last move ticket; removes cost sheet from WIP file; prepares journal voucher to transfer balance to a finished goods inventory account and forwards to the General Ledger department
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What the transaction authorization internal control?
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work orders, move tickets, and materials requisition
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What's the segregation of duties IT?
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inventory control separate from RM and FG inventory custody; cost accting separate from work centers; GL separate from other accting functions
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Supervision IT?
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supervisors oversee usage of raw materials and timekeeping
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Access IT?
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limit physical access to FG, RM stock, and production processes. Use formal procedures and documents to release materials into production.
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Accting records IT?
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work orders, cost sheets, move tickets, job tickets, materials requisitions, WIP records, FG inventory file
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Independent verification IT?
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cost accting function reconciles all cost of production. GL reconciles overall system
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IT-transaction authorization for work orders:
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reflect legitimate need base on sales forecast and the FG on hand
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IT-transaction authorization for move tickets:
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signature from each work station authorize the movement of the batch through the work centers
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IT-transaction authorization for materials requisitions:
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authorize warehouse to release materials to the work centers
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Access control-direct access to assets:
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controlled access to storerooms, production work centers, and FG warehouses; quantities in excess of standard amounts require approval
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Indirect access to assets:
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controlled use of materials requisitions, excess materials requisitions, and employee time cards
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Independent verification-what does cost accting reconcile? What does GL dept verify? What do auditors verify?
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material usage (material requisitions) and labor usage (job tickets) with standards-variances investigated; verifies movement from WIP to FG by reconciling vouchers from cost accting and inventory subsid ledgers from inv control; verify raw materials and FG inventories through physical count
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What continuously pursue improvements in all aspects of their operations, including manufacturing procedures?
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world-class companies
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3 features of world-class companies?
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highly customer oriented, have undergone fundamental changes from the traditional production model, often adopt a lean manufacturing model
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7 principles of lean manufacturing:
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pull processing, perfect quality, waste minimization, inventory reduction, production flexibility, established supplier relations, team attitude
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Pull processing-
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products pulled from consumer end (demand), not pushed from production end(supply)
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Perfect quality-
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pull processing requires zero defects
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Waste minimization-
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activities that don't add value or maximize use of scarce resources are eliminated
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What is the hallmark of lean manufacturing?
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inventory reduction
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Three problems with inventory?
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cost money, mask production problems, precipitates overproduction
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Production flexibility-
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reduce setup time to a minimum, allowing for a greater diversity of products without sacrificing efficiency
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Established supplier relations-
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late deliveries, defective raw materals, or incorrect orders will shut down production since there are inventory reserves
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Team attitude-
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each employee must be vigilant of problems that threaten the continuous flow of the production line
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The lean manufacturing model achieves production flexibility by means of what 4 things?
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changes in the physical organization of production facilities; employment of automated technologies; use of altenative accting models; use of advanced information systems
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Why the need for physical reorganization of the production facilities?
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inefficiencies in tradition plant layouts increase handling costs, conversion time, and excess inventories; employees tend to feel ownership over their stations, contrary to team concept
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What is reorganization based on?
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flows through cells which shorten the physical distance between activities
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Reorganization reduces what?
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setup and processing time, handling costs, and inventories
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What is the progression of automation in the manufacturing process toward world-class status?
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tradition to islands of technology to computer integrated manufacturing
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Tradition approach to automation-consists of what? What are organize and how? WIP follows what?
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many different types of machines which require a lot of setup time; machines and operators in functional depts; folows circuitous route through different operations
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Stand alone islands employ what that can perform __ operations with __ human involvement.
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computer numerical controlled (CNC) machines; multiple; less
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CNC Machines: reduces what? Arranged how? Needs what?
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complexity of physical layout; in groups and cells to produce entire part from start to finish; less set-up time
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What is a completely automated environment which employs automated storage and retrieval systems (AS/RS) and robotics?
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computer integrated manufacturing (CIM)
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Automated storage and retrieval systems (AS/RS) replaces what? reduces what, improves what,and lowers what?
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traditional forklifts and their human operators with computer-controlled conveyor systems; errors, improved improved inventory control, and lower storage costs
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What uses special CNC machines that are useful in performing hazardous, difficult, and monotonous tasks?
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robotics
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What increases engineers' productivity, improves accuracy, allows firms to be more responsive to market demands, and interfaces with CAM and MRPII systems?
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computer-aided design (CAD)
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What uses computers to control the physical manufacuring process? Provides greater what than human production processes?
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computer aided manufacturing (CAM); precision, speed, and control
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World-class firm needs new accting methods and new info systems that:
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show what matters to customers, identify profitable products and customers, and opportunities for improving operations and products, encourages adoption of value-added activities and processes and identify those that don't add value, efficiently support multiple users with both financial and non info
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4 things wrong with traditional accting info?
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inaccurace cost allocations, promotes nonlean behavior, time lag, financial orientation
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Inaccuract cost allocations-
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automation changes relationship between direct labor, direct materials, and overhead cost
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Promotes nonlean behavior-
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incentives to produce large batches and inventoris and conceal waste in overhead allocations
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Time lag-
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data lag due to assumption that control can be applied after the fact to correct errors
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Financial orientation-
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dollars as the standard unit of measure
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What is an information system that provides managers with info about activities and cost objects? Assumes that __ cause __ and that __ create demand for __.
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activity based costing (ABC); activities cause costs; products; activities;
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How is ABC different from traditional accting system?
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ABC has multiple activity drivers
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Pros of ABC
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more accurate costing, identifying most and least profitable products and customers, accurately tracks costs, equips managers with cost intelligence, facilitates better marketing mix, identifies waste and non-value added activities
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Cons of ABC
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time-consuming and complicated; promotes complex bureaucracies in conflict with lean manufacturing
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What are all the steps in a process that are essential to producing a product
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value steam
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What cut across functions and depts?
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value streams
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Value stream captures costs by value stream rather than what? __ than ABC.
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dept or activity; simpler
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What makes no distinction between direct and indirect costs?
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value stream accting
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3 features of value stream?
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cut across functions and depts, captures costs by value stream, simpler, no distinction between direct and indirect costs
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Information system that support lean manufacturing:
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manufacturing resources planning (MRP), MRPII, enterprise resource planning systems (ERP), and EDI
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What ensures adequate RM, maintains lowest possible level of inventory on hand, and produces production and purchasing schedules?
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MRP
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What is an extension of MRP that is system for coordnating activities of entire firm?
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MRPII
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What has huge commercial sftware packages that support info needs of entire organization, and automates all business functions?
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ERP
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What has external communications with its customers and suppliers via internet?
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EDI
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What are some automated technologies?
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CIM, AS/RS, robotics, CAD, and CAM
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What are some alternative accting models?
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ABC or value stream
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Wha are some advanced information systems?
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MRP, MRPII, ERP, EDI
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