AIS CH 16

activity-based costing

A cost system designed to trace costs to the activities that create them.

bill of materials

A document that specifies the part number, description, and quantity of each component used in a product.

computer-integrated manufacturing (CIM)

A manufacturing approach in which much of the manufacturing process is performed and monitored by computerized equipment, in part through the use of robotics and real-time data collection of manufacturing activities.

cost driver

Anything that has a cause-and-effect relationship to costs. For example, the number of purchase orders processed is a purchasing department cost driver.

job-order costing

A cost system that assigns costs to specific production batches or jobs.

job-time ticket

A document used to collect data about labor activity by recording the amount of time a worker spent on each specific job task.

lean manufacturing

Extends the principles of just-in-time inventory systems to the entire production process to minimize or eliminate inventories of raw materials, work in process, and finished goods. Lean manufacturing is often referred to as pull manufacturing because goods are produced in response to customer demand.

manufacturing overhead

All manufacturing costs not economically feasible to trace directly to specific jobs or processes.

Manufacturing resource planning

(MRP-II) An extension of materials requirements planning that seeks to balance existing production capacity and raw materials needs to meet forecasted sales demands. Also referred to as push manufacturing because goods are produced in expectation of customer demand.

master production schedule

(MPS) Specifies how much of each product is to be produced during the planning period and when that production should occur.

materials requisition

Authorizes the removal of the necessary quantity of raw materials from the storeroom.

move tickets

Documents that identify the internal transfer of parts, the location to which they are transferred, and the time of the transfer.

operations list

A document that specifies the sequence of steps to follow in making a product, which equipment to use, and how long each step should take.

process costing

A cost system that assigns costs to each process, or work center, in the production cycle, and then calculates the average cost for all units produced.

production cycle

The recurring set of business activities and related data processing operations associated with using labor, raw materials, and equipment to produce finished goods. Also called conversion cycle.

production order

A document authorizing the manufacture of a specified quantity of a particular product. It lists the operations to be performed, the quantity to be produced, and the location to which the finished product is to be delivered.

request for proposal

(RFP) A request for vendors to (1) bid on a system to meet a company's specified needs or (2) supply a fixed asset that possesses specific characteristics.