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Stack #2
| Question | Answer |
|---|---|
| Backflush costing | The name for the accounting system used with JIT manufacturing. Costs are not "flushed out" of the accounting system until goods are completed and sold. |
| Carrying costs | The costs incurred as a result of maintaining (carrying) inventories. These costs generally include: materials storage and handling costs; interest, insurance, and taxes; losses from theft, deterioration, or obsolescence; and record keeping and supplies. |
| Credit memorandum | A document used to notify the vendor that a larger quantity has been received than was ordered. |
| Debit memorandum | A document used to notify the vendor that less materials were received than were ordered. |
| Defective units | Units of product with imperfections that are considered correctable because the market value of the corrected unit will be greater than the total cost incurred for the unit. |
| Economic order quantity | The optimal (most economical) quantity of materials that should be ordered at one time; represents the order size that minimizes total order and carrying costs. |
| Electronic data interchange (EDI) | The process of business-to-business electronic communication for the purpose of expediting commerce and eliminating paperwork. |
| First-in, first-out (FIFO) | An inventory costing method based on the assumption that materials issued are taken from the oldest materials in stock. Thus, materials issued are costed at the earliest prices paid for materials in stock, and ending inventories are costed at the most rec |
| Flow of costs | The order in which unit costs are assigned to materials issued. |
| Flow of materials | The order in which materials are actually issued for use in the factory. |
| Inventory report | A form prepared when making a physical count of inventory on hand and used to reconcile differences between recorded inventory and the inventory quantities determined by physical count. |
| Just-in-time (JIT) inventory system | A system that significantly reduces inventory carrying costs by requiring that raw materials be delivered by suppliers to the factory at the exact time that they are needed for production. |
| Last-in, first-out (LIFO) | An inventory costing method based on the assumption that materials issued are the most recently purchased materials. Thus, materials issued are costed at the most recent purchase prices, and ending inventories are costed at the prices paid for the earlies |
| Lead time | The estimated time interval between the placement of an order and the receipt of materials. |
| Manufacturing cells | See Workcenters. |
| Materials control | Procedures incorporated in the system of internal control that are designed to physically protect or safeguard materials (physical control) and to maintain the proper balance of materials on hand (control of the investment in materials). |
| Materials ledger | See Stores ledger. |
| Materials (or stores) requisition | A form, prepared by authorized factory personnel and usually approved by the production department supervisor, to request materials from the storeroom; represents authorization for the storeroom keeper to issue materials for use in production. |
| Moving average | An inventory costing method based on the assumption that materials issued at any time are withdrawn from a mixed group of like materials, and no attempt is made to identify materials as being from the earliest or most recent purchases. Under this method, |
| Non-value-added activities | Operations that include costs but do not add value to the product, such as moving, storing, and inspecting. |
| Order costs | The costs incurred as a result of ordering materials; includes salaries and wages of employees involved in purchasing, receiving, and inspecting materials; communications costs, such as telephone, postage, and forms; and record-keeping costs. |
| Order point | The point at which an item of inventory should be ordered; occurs when a predetermined minimum level of inventory on hand is reached. Determining an order point requires consideration of usage, lead time, and safety stock. |
| Production department supervisor | The employee who is responsible for supervising the operational functions of a production department. |
| Purchase order | A form, prepared by the purchasing agent and addressed to the chosen vendor, that describes the materials ordered, credit terms and prices, and the date and method of delivery; represents the vendor's authorization to ship goods. |
| Purchase requisition | A form, usually prepared by the storeroom keeper or employee with similar responsibility, that is used to notify the purchasing agent that additional materials are needed; represents the agent's authority to purchase materials. |
| Purchasing agent | The employee who is responsible for purchasing the materials needed for production. An individual in any organization who is responsible for the purchasing function. |
| Receiving clerk | The employee who is responsible for supervising incoming shipments of materials and making sure that all incoming materials are checked as to quantity and quality. |
| Receiving report | A form that is prepared by the receiving clerk for each incoming shipment of materials. The clerk identifies the materials, determines the quantity received, and records this information on the receiving report as well as the name of the shipper, date of |
| Returned materials report | A form prepared to accompany materials being returned to the storeroom that had been previously requisitioned but were not used in production. |
| Return shipping order | A form prepared by the purchasing agent when goods are to be returned to the vendor. |
| Safety stock | The estimated minimum level of inventory needed to protect against stockouts. |
| Scrap (or waste) materials | By-products that are generated in the manufacturing process; usually, such materials have some value and their costs and revenues are accounted for separately. |
| Spoiled units | Units of product with imperfections that cannot be economically corrected; they are sold as items of inferior quality or "seconds." |
| Stockout | Running out of an item of inventory; may occur due to inaccurate estimates of usage or lead time or other unforeseen events, such as the receipt of damaged or inferior materials from a supplier. |
| Storeroom keeper | The employee who is responsible for the storing and maintaining of materials inventories. |
| Stores (or materials) ledger | A subsidiary ledger supporting the Materials control account in the general ledger. The individual accounts in the stores ledger are used to record receipts and issues of materials and show the quantity and cost of materials on hand. |
| Stores requisition | See Materials requisition. |
| Summary of materials issued and returned | A form used to record all issuances of materials to the factory, returns of materials previously requisitioned, and returns of materials to the vendors (sellers). The summary, when completed at the end of a period, provides the information needed to recor |
| Throughput time | The time that it takes a unit to make it through the production process. |
| Trigger points | Points in the production process at which to record journal entries in a backflush system. |
| Usage | The quantity of materials used or the number of direct labor hours worked. |
| Velocity | The speed with which units are produced in a manufacturing system. It is the inverse of the throughput time. |
| Vendor's invoice | A form, usually received from the vendor before goods are delivered, confirming a purchase of materials and representing a "bill" for the ordered goods. The purchasing agent should compare the invoice with the related purchase order to verify the descript |
| Waste materials | See Scrap materials. |
| Work centers | Combined manufacturing functions that were performed in individual departments in a traditional manufacturing system. |
Created by:
cacc11
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