Inventory (Conversion Business Process) Practice Quiz
1. Most production costs are locked in at which stage in the production cycle?
a. product design
b. production planning
c. production operation
d. cost accounting
2. The use of move tickets mitigates which threat?
a. loss of data
b. theft of inventory
c. inefficient performance
d. overproduction of inventory
3. Activity based costing can be used to refine
a. job order costing
b. process costing
c. both job order and process costing
d. neither job order and process costing
4. Which system is most likely to be used by a company that mass produces large batches of standard items in anticipation of customer demand? (These specific production batches can be distinctly identified.)
a. job order costing
b. standard costing
c. activity based costing
d. process costing
5. The development of a master production schedule would be most effective in preventing which of the following threats?
a. recording and posting errors
b. loss of inventory
c. production of poor quality goods
d. excess production
6. Which control procedure is probably least effective in reducing the threat of inventory loss?
a. limiting physical access to inventory
b. documenting all transfers of inventory within the company
c. regular materials usage reports that highlight variances from standards
d. periodic physical inventory counts and investigation of any discrepancies between those counts and recorded amounts.
7. In a production control application system, which of the following documents serves as authorization to release raw materials to the production departments?
a. production order
b. job time card
c. journal voucher
d. material requisition
8. In a production control application system, which of the following departments should receive copies of production orders?
a. inventory control
b. cost accounting
c. purchasing
d. general ledger
9. In a production control application system, which of the following documents serves as authorization to the production departments to make certain products?
a. production order
b. job time card
c. material requisition
d. journal voucher
10. Which of the following is a characteristic associated with just-in-time (JIT) production?
a. Parts are produced only as they are required in subsequent operations
b. A constant flow production rate
c. Both a and b
d. Neither a or b
11. A well functioning system of internal control over the inventory/production functions would provide that finished goods are to be accepted for stock only after presentation of a completed production order and a(n)
a. shipping order
b. material requisition
c. bill of lading
d. inspection report
12. If preparation of a periodic scrap report is essential in order to maintain adequate control over the manufacturing process, that data for this report should be accumulated in the
a. accounting department
b. production department
c. warehousing department
d. budget department
13. The objectives of the internal control structure for a production cycle are to provide assurance that transactions are properly executed and recorded, and that
a. independent internal verification of activity reports is established
b. transfers to finished goods are documented by a completed production report and a quality control report
c. production orders are prenumbered and signed by a supervisor
d. custody of work in process and of finished goods is properly maintained
14. Which of the following control procedures would most likely be used to maintain accurate perpetual inventory records?
a. Independent storeroom count of goods received.
b. Periodic independent reconciliation of control and subsidiary records.
c. Periodic independent comparison of records with goods on hand.
d. Independent matching of purchase orders, receiving reports, and vendors' invoices.
15. The sum of direct labor and overhead cost is referred to as which of the following?
a. diversion cost
b. indirect labor
c. conversion cost
16. Data on purchased materials, parts, or components are captured by which of the following?
a. receiving transaction file
b. production cost file
c. completed product file
d. shipment transaction file
e. none of the above
Answers:
1. A
2. B
3. C
4. A
5. D
6. C
7. D
8. B
9. A
10. C
11. D
12. B
13. D
14. C
15. C
16. A