Solution Manual for Accounting Information

Systems, 10th Edition

To download the complete and accurate content document, go to:

https://testbankbell.com/download/solution-manual-for-accounting-information-system
s-10th-edition/
Solution Manual for Accounting Information Systems, 10th Edition

CHAPTER 7
THE CONVERSION CYCLE

REVIEW QUESTIONS

1. A company’s conversion cycle transforms (converts) input resources, such as raw

materials, labor, and overhead, into finished products or services for sale.

2. The batch processing system consists of four basic processes: plan and control

production, perform production operations, maintain inventory control, and perform

cost accounting.

3. Continuous processing creates a homogeneous product such as cement through a

continuous series of standard procedures, while batch processing produces discrete

groups of a uniform product, such as a particular size and type of box. Made-to-

order processing produces goods which are built to customer specifications.

Continuous and batch processing systems produce goods to meet expected sales

demand, while made-to-order processing systems produce goods to meet actual

orders.

4. Sales forecast, production schedule, bill of materials, route sheet, work order, move

ticket, and materials requisition.

5. The primary determinant for materials requirements, the bill of materials, specifies

the types and quantities of the raw materials and subassemblies used in producing a

single unit of finished product. Given a good that is to be produced from the

production schedule, the route sheet specifies the sequence of operations (i.e.

machine or subassembly) and the standard time allocated to each task.

6. An objective of inventory control is to minimize total inventory cost while ensuring

that adequate inventories exist to meet current demand. Inventory models used to

Visit TestBankBell.com to get complete for all chapters

 Chapter 7 page 319

achieve this objective help answer two fundamental questions:

1. When should inventory be purchased?

2. How much inventory should be purchased?

7. The work order from the production planning and control department triggers the

cost accounting process.

8. Materials requisitions, excess materials requisitions, materials returns, job tickets,

move tickets, and standards for the various resources (as provided by the standard

cost file).

9. Probably the most important type of report is the variance report. This report

illustrates to management the actual cost versus standard costs and any deviations

from the standards. These reports allow management to make any necessary

changes to avoid unfavorable variances. Further, if favorable variances are being

observed with respect to direct materials, the bill of materials may be able to be

reduced to keep raw materials inventory down.

10. The receipt by cost accounting of the last move ticket for a batch from the work

center signals the completion of the production process.

11. Inventory control, which maintains the records for the raw materials and finished

goods inventories, should be separate from both the raw materials storeroom and

finished goods warehouse functions. Cost accounting, which maintains the records

for work in process, should be separate from the work centers in the production

process.

12 .

a. Transaction authorization: Work orders, move tickets, and materials

 Chapter 7 page 320

requisitions.

b. Segregation of duties:

i. Inventory control separate from RM and FG inventory custody.

ii. Cost accounting separate from work centers.

iii. GL separate from other accounting functions.

c. Access: Limit physical access to FG, RM stocks, and production

processes. Use formal procedures and documents to release materials

into production.

13. Computer-aided design (CAD) involves the use of computers to design products to

be manufactured and the processes by which they are produced. Computer-aided

manufacturing (CAM) involves the use of computers to manufacture the product.

14. If production problems are causing bottlenecks, then work-in-process (WIP)

inventory will tend to accumulate. If the wrong product mix is being produced, then

inventories may build up while the customers are unhappily waiting for delivery of

their product. Inventories may build up and become obsolete or damaged while they

are sitting in storage. Further, production has been wasted building the wrong

product.

15. The goal of lean production is improved efficiency and effectiveness in every area,

including product design, supplier interaction, factory operations, employee

management, and customer relations.

16. Activities describe the work performed in a firm, while cost objects are the reasons

for performing activities.

17. Essential activities add value to the organization either through adding value to the
 Chapter 7 page 321

customer or to the organization. Non-essential activities do not add value.

18. “Islands of technology” describes an environment where modern automation exists in

the form of islands that stand alone within the traditional setting.

19. Computer-integrated manufacturing (CIM) is a completely automated environment

with the objective of eliminating non-value-added activities. A CIM facility makes use

of group technology cells comprised of various types of computer numerical

controlled (CNC) machines to produce an entire part from start to finish in one

location.

20. A company’s value stream includes all the steps in the process that are essential to

producing a product. These are the steps for which the customer is willing to pay.
 Chapter 7 page 322

DISCUSSION QUESTIONS

1. The various work centers send cost accounting completed move tickets. Along with

standards provided by the standard cost file, move tickets enable cost accounting to

update the affected WIP accounts with the standard charges for manufacturing

overhead (MOH). The receipt of the last move ticket for a particular batch signals the

completion of the production process and the transfer of products from WIP to the

finished goods inventory. At that point cost accounting closes the work-in-process

account and increases finished goods.

2.

a. The assumption that demand for the product is known with certainty is not

unreasonable for most firms. Some firms will have better estimates than

others, but overall projecting demand for a product is not unreasonable.

Assuming that the demand is constant is unreasonable for many products. At

the very extreme, Christmas items are highly seasonal, as are many

recreational items such as camping gear, hiking gear, suntan lotion, and

snow-skiing equipment. Many industries’ products would violate the

assumption of constant demand.

b. The lead time is known and constant. This assumption is not too unrealistic.

Trading partner arrangements between customer and supplier reduces lead-

time uncertainty. In some cases, a probability distribution would be better.

c. The assumption that the total cost of placing orders is inversely related to the

quantities ordered (larger orders means fewer orders placed) is not

troublesome.
 Chapter 7 page 323

d. The assumption that all inventories in the order arrive at the same time is

probably not realistic and could cause shortages.

e. The assumption that no quantity discounts exist is extremely unrealistic. Most

firms give quantity discounts.

f. The assumption that the total yearly carrying costs is a variable that increases

as the quantities ordered increases in not troublesome.

3. This is the point where total costs are minimized. In other words, it is the minimum of

total holding costs plus total carrying costs.

4. The cost accountants need to keep the records for WIP inventory files. They also

need to track labor, material, and overhead variances, and provide management

with these reports so that they may make any necessary adjustments. The work

centers should not be allowed to track their own variances, as they might try to cover

them up rather than fix them.

5. By prenumbering source documents and referencing these in the WIP records,

every item of FG inventory can be traced back through the production process to its

source. This process is important for detecting errors in production and for tracking

batches through the production process.

6. The general ledger department provides independent verification by reconciling WIP

journal vouchers from cost accounting and summaries of the inventory subsidiary

ledger from inventory control.

7. The following features characterize the world-class company:

a. World-class companies must maintain strategic agility and be able to turn on

a dime. Top management must be intimately aware of customer needs and not
 Chapter 7 page 324

become rigid and resistant paradigm change.

b. World-class companies motivate and treat employees like appreciating

assets. To activate the talents of everyone, decisions are pushed to the lowest

level in the organization. The result is a flat and responsive organizational

structure.

c. A world-class company profitably meets the needs of its customers. Its goal is

not simply to satisfy customers, but to positively delight them. This is not

something that can be done once and then forgotten. With competitors

aggressively seeking new ways to increase market share, a world class firm must

continue to delight its customers.

d. The philosophy of customer satisfaction permeates the world class firm. All of

its activities, from the acquisition of raw materials to selling the finished product,

form a “chain of customers.” Each activity is dedicated to serving its customer,

which is the next activity in the process. The final “paying” customer is the last in

the chain.

e. Finally, manufacturing firms that achieve world-class status, do so by

following a philosophy of lean manufacturing. This involves doing more with less,

eliminating waste, and reducing production cycle time.

8. By replacing labor with automation, a firm can reduce waste, improve efficiency,

increase quality, and improve flexibility. Examples of automation include: Automated

Storage and Retrieval Systems, Robotics, Computer Aided Design (CAD),

Computer-aided manufacturing (CAM).

9. Students will present different answers to this question. For example: Second Skin
 Chapter 7 page 325

Swimwear in Boca Raton, Florida digitizes the image of the customer, which is then

displayed on the computer screen. The customer, with the aid of a salesperson, then

tries various swimsuits on the screen, making any desired changes. Different fabrics

are also examined. Once a suit is decided upon, a pattern is automatically prepared

and cut for manufacturing. Thus, the customer basically designs her own swimsuit.

Some car manufacturers allow customers to add on their options via a computer

screen by which they can visualize the results of different options. Once the

customer places an order, the order is sent to the manufacturer and the car is

custom-finished. Weyerhauser, a lumber company, has placed kiosks in some of its

retailers’ stores which allow customers to build their decks, with the aid of a

salesperson. Once the deck is drawn with the help of a CAD program, the customer

may have a print-out of his/her deck along with a bill of materials.

10. Low priced, poor quality raw materials can end up costing the firm more money if

more scrap is produced due to difficulty of working with the raw material. Also, poor

quality raw materials or labor will most probably result in the production of an inferior

good and ultimately tarnish the firm’s reputation.

11. The problem is that manufacturing performance is not given enough emphasis by

traditional cost accounting techniques, and traditional cost accounting techniques do

not support the objectives of lean manufacturing firms. Firstly, traditional cost

accounting systems do not accurately trace costs to products and processes. This

results in product cost distortions, which can ultimately cause poor decisions

regarding pricing, valuation, and profitability. Secondly, standard costing motivates

non-lean behaviors through the performance measures of personal efficiency of

 Chapter 7 page 326

production workers and effective utilization of manufacturing facilities. This

promotes the production of large batches of products and a build-up of inventory. A

third problem is the time lag between the reports generated by the cost accountants

and the actual manufacturing activities. Managers need to know in real time about a

robotic machine, which is producing sub-optimal work. Lastly, the accounting data

uses dollars as the standard unit of measure between items that are not always

amenable to a dollar measure, such as product quality, delivery time, set-up time,

etc. Attempting to force this data into such a common financial measure may distort

the problem and promote bad decisions.

12. The ABC process model provides critical information about cost drivers and

performance measures. This information can be used to constantly analyze the

relative efficiency of activities and the resources used in the process in order to

better manage the activities and resources and target areas for cost reduction.

13. In the traditional manufacturing environment, direct labor is a much larger

component of total manufacturing costs than in the CIM environment. Overhead, on

the other hand, is a far more significant element of cost in advanced technology

manufacturing.

14. The use of standard costs provides a type of access control. By specifying the

quantities of material authorized for each product, the firm limits usage. To obtain

excess quantities requires special authorization and excess materials requisitions.

15. A Value Stream Map (VSM) is used to graphically represent a business processes to

identify aspects of it that are wasteful and should be removed. A VSM identifies all of

the actions required to complete processing on a product, along with key information
 Chapter 7 page 327

about each action item. Specific information may include total hours worked,

overtime hours, cycle time to complete a task, and error rates. The VSM shows the

total time required for each processing step, the time required between steps, and

identifies the types of time spent between steps such as the outbound batching time,

transit time, and inbound queue time.

16. ABC allows managers to assign costs to activities and products more accurately

than standard costing permits. Some advantages that this offers are:

a. More accurate costing of products/services, customers, and distribution

channels

b. Identifying the most and least profitable products and customers

c. Accurately track costs of activities and processes.

d. Equip managers with cost intelligence to drive continuous improvements.

e. Facilitate better marketing mix

f. Identify waste and non-value-added activities.

17. ABC has been criticized for being too time consuming and complicated for practical

applications over a sustained period. The task of identifying activity costs and cost

drivers can be a significant undertaking that is not completed once and then

forgotten. As products and processes change so do the associated activity costs

and drivers. Unless significant resources are committed to maintaining the accuracy

of activity costs and the appropriateness of drivers, cost assignments become

inaccurate. Critics charge that rather than promoting continuous improvement, ABC

creates complex bureaucracies within organizations that are in conflict with the lean

manufacturing philosophies of process simplification and waste elimination.

 Chapter 7 page 328

18. Traditional accounting systems do not accurately trace costs to products and

processes. One consequence of new technologies is a changed relationship

between direct labor and overhead costs. In the traditional manufacturing

environment, direct labor is a much larger component of total manufacturing costs

than in the CIM environment. Overhead, on the other hand, is a far more significant

element of cost in advanced technology manufacturing. In this setting, traditional

cost accounting procedures are inadequate. For traditional allocations to be correct,

a direct relationship between labor and technology needs to exist. In CIM, this

relationship is diametric rather than complementary. When the cost pool is large and

the allocation method ambiguous, any miscalculation in assigning labor is magnified

many times in the calculation of overhead.

19. Most organizations produce more than one product, but these often fall into natural

families. Product families share common processes from the point of placing the

order to shipping the finished goods to the customer. Value stream accounting cuts

across functional and departmental lines to include costs related to the product

family such as marketing, selling expenses, product design, engineering, materials

purchasing, distribution, and more, but makes no distinction between direct costs

and indirect costs.

20. MRP II evolved into large suites of software called enterprise resource planning

(ERP) systems. Similarities in functionality between ERP and MRP II systems are

quite apparent. Some argue that very little real functional difference exists between

the two concepts. Indeed, the similarities are most noticeable when comparing top-

end MRPII systems with low-end ERP packages.

 Chapter 7 page 329

A primary distinction, however, is that the ERP has evolved beyond the

manufacturing marketplace to become the system of choice among non-

manufacturing firms as well. On the other hand, cynics argue that changing the

label from MRP II to ERP enabled software vendors to sell MRP II packages to non-

manufacturing companies. The market for ERP systems was for many years limited

by high cost and complexity to only the largest manufactures. This market was

dominated by a few software vendors including SAP, J.D. Edwards, Oracle, and

PeopleSoft. In recent years this market has expanded tremendously by the entry of

many small vendors targeting small and mid-sized customers with less expensive

and more easily implemented ERP systems.

 Chapter 7 page 330

MULTIPLE CHOICE

1. B

2. E

3. C

4. B

5. D

6. D

7. B

8. A

9. E

10. D
 Chapter 7 page 331

PROBLEMS

1. DOCUMENT FLOWCHART
See diagram below
 Chapter 7 page 332

2. ECONOMIC ORDER QUANTITY

a. EOQ =

D = 32,000
S = $13
H = $.35
EOQ = 1,541

b. ROP = I x d
I= 4
D = 91
ROP = 366

3. WORLD-CLASS COMPANIES

Results will vary. Examples are:

a. Dell Computers – improved inventory turnover ratios

b. Toyota – improved inventory turnover ratios

c. GE – process improvement

d. British Vita – MRP II

e. Apple Computers – JIT

4. INTERNAL CONTROL

a. The work order is not sent to the cost accounting department to set up

a new WIP account. This can result in misallocation of costs to WIP. A

corrective procedure is to have the work order sent directly to the cost

accounting department.

b. Work centers generate their own material requisitions, excess material

requirements, and material returns documents. The work centers

should not have both custody over raw materials and the
 Chapter 7 page 333

corresponding authorization responsibilities. A possible danger is that

the work centers may pilfer raw materials and be able to cover it up by

altering documents. A corrective procedure is to have the production

planning and control department generate these documents and have

the cost accounting department maintain the WIP records.

5. DESIGN AND DOCUMENT MANUFACTURING PROCESSES

Solutions to this problem will vary. The key elements of this central

manufacturing system are would include:

a. Production Planning and control produce the production schedule

based upon the monthly sales forecast on file in the central computer system

b. The central system produces work orders, material requisitions, move

tickets, and purchase orders based upon stored standards and inventory on

hand data.

c. Purchase orders are sent directly to suppliers (this could be via mail,

fax, or EDI).

d. Work centers access their work schedules and necessary documents

from terminal in the work areas. Minimal hard copy is produced.

e. When work is completed work center employees enter the time and

materials used in production.

f. Storekeeping issues raw material to employees as need. They access

the central system to download the materials requisitions, which the

employees sign in exchange for the materials.

g. The central system calculates WIP and automatically transfers WIP to

 Chapter 7 page 334

finished goods inventory when production is complete.

h. Cost accounting receives management report on demand from the

system via their department.

i. Purchasing receives management reports on products ordered via the

department terminal.

Production Planning and Control Data Processing Center Work Centers

Central Review Production

Review Sales Forecast Manufacturing Schedule, Download
Develop Prod System Documents
Schedule
A
Material
Production req
Sales Forecast Work
Schedule
RM Orders
Purchases Inventory PO Move
List BOM
Ticket
Rout Sheet
Production
Vendor
Review Schedule
and File Employee Perform
Records Assigned
tasks
Job Ticket
Production
RM
Schedule Move Ticket
Purchases Material
List Work Order reqWork
Enter Employee Orders
Matl Req Job and Time Move
Data Ticket
WIP

PO Data Material
reqWork
AP Ledger Orders
Move
Cost Standards Ticket

Problem 7-5 Manufacturing System Flowchart Page 1

 Chapter 7 page 335

Store Keeping Cost Accounting Department Purchasing Department

A
Employee A

A
Download
Download
Purchase
Production Cost
Access Material Reports
Reports
Req per worker
request for RM
Management
Management
Repts
Repts
Material
Req

Issue RM to Review
Review
Employee and File
and File
and obtain
Signature

Management
Management
Material Repts
Repts
Req

Problem 7-5 Manufacturing System Flowchart Page 2

6. ZERO DEFECTS PROCESS

 Chapter 7 page 336

The advantages are that no defective units will be produced once a problem is

detected. Defective units are problematic and can cause recalls of the tractors at

great expense to Northern and damage to customer relationships. In the long run

the costs associated with shutting down the production line are more than off-set by

the cost savings from avoiding recalls and damage to the company’s reputation.

Achieving JIT requires more than simply the desire to do so. Challenges include:

a. Changes in organization culture

b. Significant personnel training and patience.

c. Small production lot sizes

d. The company needs to obtain excellent cooperation from suppliers. Since the

firm will hold no excess inventory, late or defective deliveries of raw materials

can cost the company in downtime.

e. The company must maintain excellent employee relations and promote

teamwork. Quality must be the objective of everyone in the organization.

7. ACTIVITY DRIVERS

Overhead components for the company include executive salaries, legal expenses,

ordering costs, accounting and other support department costs, janitorial services,

electricity, plant, property and equipment costs, inventory handling expenses, saw

blades, scrap or waste disposal costs, glue, sand paper, mineral oil, packaging

supplies, and shipping costs.

An activity driver for cutting could be lumber square feet; the most logical activity

driver for the assembly, shaping, sanding, and finishing processes would be the

number of cutting boards made. An activity driver for packing could be the number of
 Chapter 7 page 337

boxes packed.

8. LEAN MANUFACTURING PRINCIPLES

Responses may vary, but the essay should include the following points:

a. Pull processing. Products are pulled from the consumer end (demand), not

pushed from the production end (Supply). They are pulled into production as

capacity upstream becomes available. Unlike the traditional push process, lean

does not create batches of semi-finished inventories at bottlenecks.

b. Perfect quality. Success of the pull processing model requires zero defects

in raw material, work in process, and finished goods inventory. Poor quality is

very expensive to a firm. In the traditional manufacturing environment, these

costs can represent between 25 to 35 percent of total product cost. Also, quality

is a basis on which world-class manufacturers compete. Consumers demand

quality and seek the lowest-priced quality product.

c. Waste minimization. All activities that do not add value and maximize the

use of scarce resources must be eliminated. The following are examples of

waste in traditional environments:

i. Overproduction of products,

ii. Transportation of products

iii. Bottlenecks of products waiting to move to the next production step.

iv. Idle workers.

v. Inefficient motion of workers who must walk more than necessary in the

completion of their assigned tasks

 Chapter 7 page 338

vi. Islands of technology.

vii. Production defects that requires unnecessary effort to inspect and/or

correct

viii. Safety hazards that cause injuries and lost work hours and associated

expenses

d. Inventory reduction. The hallmark of lean manufacturing firms is their

success in inventory reduction. Lean firms have only a few days or sometimes

even a few hours of inventory on-hand. The three common problems outlined

below explain why inventory reduction is important.

i. Inventories cost money. They must be transported throughout the

factory, handled, stored, and counted. In addition, inventories lose value

through obsolescence.

ii. Inventories camouflage production problems. Bottlenecks and capacity

imbalances in the manufacturing process cause work-in-process inventory

to build up at the choke points. Inventories also build up when customer

orders and production are out of sync.

iii. Willingness to maintain inventories can precipitate overproduction.

Because of setup cost constraints, firms tend to overproduce inventories in

large batches to absorb the allocated costs and create the image of

improved efficiency.

e. Production flexibility. Long machine setup procedures cause delays in

production and encourage overproduction. Lean companies strive to reduce

setup time to a minimum, which allows them to produce a greater diversity of

 Chapter 7 page 339

products quickly, without sacrificing efficiency at lower volumes of production.

f. Established Supplier relations. A lean manufacturing firm must have

established and cooperative relationships with vendors – No late deliveries,

defective raw materials, or incorrect orders.

g. Team Attitude. Lean manufacturing relies heavily on the team attitude of all

employees involved in the process. Each employee must be vigilant of problems

that threaten the continuous flow operation of the production line. Lean requires

a constant state of quality control along with the authority to take immediate

action
 Chapter 7 page 340

INTERNAL CONTROL CASES

1. UTICA LIGHTING COMPANY (CENTRALIZED SYSTEM WITH DISTRIBUTED

TERMINALS

a. and b: See following pages.

c. Internal Controls Weaknesses

1. FG Warehouse clerk has asset custody and also has inventory control

responsibility. This task should be performed by an independent function.

2. Accounting Records; Excess Material Usage Requisitions should be used

to identify production problems such as theft, loss, and damage of raw

materials.

3. Supervision: Job time data should be reviewed and approved by a

supervisor.

4. Segregation of Duties: Storekeeper has asset custody and RM Inventory

recordkeeping responsibility. RM record keeping should be transferred to

an accounting function.

5. Segregation of Duties: Storekeeper authorizes RM purchases, receives

ordered items, and update the RM ledger. These tasks should be separated

between purchasing, receiving, and inventory control functions.

6. Segregation of Duties: Storekeeper should not have GL posting

responsibility.

7. Cost accounting should not have GL posting responsibility.

Chapter 7 page 341
Chapter 7 page 342
 Chapter 7 page 343

2. EXCELSIOR LAWN FURNATURE (MANUAL SYSTEM WITH STAND ALONE

PC SUPPORT)

a and b: See the diagrams on the following pages.

c. Control Weaknesses

1. accounting records; excess material Usage Requisitions should be

used to identify production problems and theft, loss, damage of raw materials.

2. Segregation of Duties: Storekeeper has asset custody and RM

Inventory recordkeeping responsibility. RM record keeping should be

transferred to an accounting function.

3. Excess materials are left uncontrolled in work areas where they could

be lost, damaged, or stolen.

d. Optional flowchart: Student solutions may vary, but they should address the

control weaknesses listed above.

Chapter 7 page 344
Chapter 7 page 345
 Chapter 7 page 346

3. LAWN WIZARD INC. (MANUAL SYSTEM WITH STAND ALONE PC

SUPPORT)
a. See the flowchart on the following page.
b. Risks in current system:

1. Material usage is not properly controlled.

2. Job time accounting may be inaccurately recorded

3. Potential for theft of raw materials.

c. Changes to controls to reduce risks in part b (above)

1. Accounting Records: Excess Material Usage Requisitions should be

used to identify production problems and theft, loss, damage of raw

materials.

2. Supervision: Job time data should be reviewed and approved by a

supervisor.

3. Segregation of Duties: Storekeeper has asset custody and RM

Inventory recordkeeping responsibility. RM record keeping should be

transferred to an accounting function.

Chapter 7 page 347
 Chapter 7 page 348

4. TRIUMPH AUTOMOTIVE ELECTRONICS (CENTRALIZED SYSTEM

WITH DISTRIBUTED TERMINALS)

a and b: See following pages.

c. Risks in Current System

1. Material usage is not properly controlled.

2. Job time accounting may be inaccurately recorded

3. Potential for theft of raw materials.

4 & 5. General ledger accounts may be inaccurately maintained.

d. Controls needed to reduce risks

1. Accounting Records: Excess Material Usage Requisitions should be

used to identify production problems such as theft, loss, and damage of

raw materials.

2. Supervision: Job time data should be reviewed and approved by a

supervisor.

3. Segregation of Duties: Storekeeper has asset custody and RM

Inventory recordkeeping responsibility. RM record keeping should be

transferred to an accounting function.

4. Segregation of Duties: Cost accounting should not have GL posting

responsibility.

5. Segregation of Duties: Storekeeper should not have GL posting

responsibility.
Chapter 7 page 349
Chapter 7 page 350
 Chapter 7 page 351

5. AJAX MANUFACTURING (CENTRALIZED SYSTEM WITH

DISTRIBUTED TERMINALS)

a and b: see following pages.

c. Risks in Current System

1. Material usage is not properly controlled

2. Job time accounting may be inaccurately recorded

3. Potential for theft, lost, or wastage of raw materials.

4 & 5. General ledger accounts may be inaccurately maintained.

d. Changes to reduce risks listed in part c (above)

1. Accounting Records: Excess Material Usage Requisitions should be used

to identify in production problems and theft, loss, damage of raw materials.

2. Supervision: Job time data should be reviewed and approved by a

supervisor.

3. Segregation of Duties: Storekeeper has asset custody and RM Inventory

recordkeeping responsibility. RM record keeping should be transferred to an

accounting function.

4. Segregation of Duties: Cost accounting should not have GL posting

responsibility.

5. Segregation of Duties: Storekeeper should not have GL posting

responsibility.
Chapter 7 page 352
Solution Manual for Accounting Information Systems, 10th Edition

Chapter 7 page 353

Visit TestBankBell.com to get complete for all chapters