Question 1

The major activities within the conversion process include all but

Accepted Answer

A) Strategic planning that supports the company's operational goals 
B) Optimizing the use of the employees, property, and inventories that are needed in operations 
C) Controlling production flows, ensuring product quality 
D) Preparing the related cost accounting and financial accounting records

Question 2

The reconciliation of time sheets with production reports for work-in-process and finished inventories minimizes the related risk of all of the following EXCEPT:

Accepted Answer

A) Omitted or duplicate payroll transactions 
B) Timing issues 
C) Incorrect amounts 
D) Lost or stolen inventory

Question 3

Manufacturing has changed in recent years as a result of each of the following factors except:

Accepted Answer

A) Globalization 
B) Technological advances 
C) Increased competition 
D) Lack of economic prosperity

Question 4

Standard costs take into consideration all of the following except:

Accepted Answer

A) The cost of materials utilized to maintain production equipment 
B) The cost of labor used to operate the production machinery 
C) The cost of the sales manager's salary 
D) Factory overhead items that cannot be directly correlated to product production

Question 5

The ________ _________ function concerns the control of raw materials inventory held in storage or in holding areas, waiting for processing.

Accepted Answer

A) Raw materials 
B) Inventory warehousing 
C) Inventory stores 
D) Quality control

Question 6

Perpetual inventory systems:

Accepted Answer

A) Record changes in inventory categories only at the end of each period 
B) Record changes in inventory categories only when sales are made 
C) Record changes in inventory categories whenever material is moved from one category to another 
D) Does not address raw materials

Question 7

The final hub in the logistics function which involves a follow-up to production, where the products are inspected before they are moved to the warehouse or shipping area is referred to as:

Accepted Answer

A) Quality control 
B) Shipping notice 
C) Purchase requisition 
D) Warehousing

Question 8

The preparation of production orders and routing slips on prenumbered forms minimizes the related risk of:

Accepted Answer

A) Omitted transactions 
B) Incorrect amounts 
C) Duplicate payroll transactions 
D) Invalid orders

Question 9

The term conversion processes is often used synonymously with:

Accepted Answer

A) Operations 
B) Production 
C) Manufacturing 
D) All of the above

Question 10

Security of assets and documents include all of the following except:

Accepted Answer

A) Water sprinklers 
B) Adequate insurance coverage 
C) Restricted movement of office supplies 
D) Security guards

Question 11

Which of the following is NOT a responsibility given to the individuals making purchases for the company?

Accepted Answer

A) Purchasing raw materials for production 
B) Specifying the order and sequence of payments to vendors 
C) Selecting vendors 
D) Specifying the quantities to be ordered

Question 12

Functions of corporate governance includes all of the following except:

Accepted Answer

A) Management oversight 
B) Earnings management 
C) Financial stewardship 
D) Internal control system

Question 13

Segregation of duties is accomplished by which of the following?

Accepted Answer

A) Accounting personnel having restricted access to physical inventory 
B) Warehouse personnel signing all documents related to material movements 
C) Production personnel restricted to one manufacturing station at all times 
D) None of the above

Question 14

Which of the following involves the inclusion of both variable and fixed costs in the determination of unit costs for ending inventories and cost of goods sold?

Accepted Answer

A) Just-in-time production systems 
B) Manufacturing resource planning 
C) Earning management 
D) Absorption costing

Question 15

Variances:

Accepted Answer

A) Represent the differences between actual costs and the standard costs applied 
B) Represent the difference between design specifications and production results 
C) Represent flaws in the production results 
D) Each of the answers is correct.

Question 16

The operations component of the logistics function has which of the following elements?

Accepted Answer

A) Maintenance and control 
B) Production 
C) Inventory control 
D) Capital budgeting

Question 17

Which of the following activities is not part of the planning component of the logistics function?

Accepted Answer

A) Research and development 
B) Capital budgeting 
C) Human resource management 
D) Scheduling

Question 18

When there is a difference between the inventory records quantity and the physical count of inventory:

Accepted Answer

A) There is a variance. 
B) The difference can be ignored if minor. 
C) The difference is resolved through inventory reconciliation. 
D) The difference is ignored if the physical quantity exceeds inventory record quantity.

Question 19

Manpower displacement through automation:

Accepted Answer

A) Is considered a benefit through cost/benefit analysis 
B) Should be a concern of management 
C) Is the goal of proper engineering 
D) Seldom results in termination of employees

Question 20

The form that describes the chain of events that constitute a product's production is referred to as the:

Accepted Answer

A) Operations list 
B) Bill of materials 
C) Engineering 
D) Capital budgeting

Exam 11: Conversion Processes and Controls