Podcast
Questions and Answers
What is one of the primary purposes of a purchase order?
What is one of the primary purposes of a purchase order?
- To authorize acceptance of goods (correct)
- As a source document for processing employee payroll
- To serve as a contract for the sale
- To ensure the vendor's compliance with legal terms
Which function does the receiving department NOT perform?
Which function does the receiving department NOT perform?
- Verify vendor's legal compliance (correct)
- Make a receiving report
- Check for discrepancies in quantities received
- Unpack the received materials
How many copies of a purchase order are typically prepared?
How many copies of a purchase order are typically prepared?
- Four
- Three
- Two
- Five (correct)
What essential information is included in a receiving report?
What essential information is included in a receiving report?
What does the materials ledger clerk use the purchase order for?
What does the materials ledger clerk use the purchase order for?
What is the primary purpose of the purchase requisition?
What is the primary purpose of the purchase requisition?
Which of the following is NOT a form used in internal control for materials?
Which of the following is NOT a form used in internal control for materials?
Effective control in production aims to achieve which of the following outcomes?
Effective control in production aims to achieve which of the following outcomes?
Who primarily heads the purchasing department responsible for procurement?
Who primarily heads the purchasing department responsible for procurement?
Which of the following is a responsibility of the purchasing agent?
Which of the following is a responsibility of the purchasing agent?
Purchase orders typically require how many copies to be made?
Purchase orders typically require how many copies to be made?
Which function is NOT related to materials management?
Which function is NOT related to materials management?
What does a purchase request typically contain?
What does a purchase request typically contain?
Which department receives the first copy of the receiving report after materials are ordered?
Which department receives the first copy of the receiving report after materials are ordered?
What is the role of the purchasing department in the receiving report process?
What is the role of the purchasing department in the receiving report process?
What is compared to ensure that materials received meet purchase order specifications?
What is compared to ensure that materials received meet purchase order specifications?
What document allows the receiving clerk to return excess items to the vendor?
What document allows the receiving clerk to return excess items to the vendor?
Who takes responsibility for the materials once they have been transferred to the storeroom?
Who takes responsibility for the materials once they have been transferred to the storeroom?
If the vendor cannot deliver specified merchandise, what action may be necessary?
If the vendor cannot deliver specified merchandise, what action may be necessary?
What is usually attached to the invoice as evidence of payment for transportation charges?
What is usually attached to the invoice as evidence of payment for transportation charges?
How many copies of the receiving report are typically prepared?
How many copies of the receiving report are typically prepared?
What is the primary function of a bin card?
What is the primary function of a bin card?
Which department receives the copy of the Materials Requisition for posting on the Materials Ledger Card?
Which department receives the copy of the Materials Requisition for posting on the Materials Ledger Card?
When materials are returned to the storeroom, what document accompanies the return?
When materials are returned to the storeroom, what document accompanies the return?
What accounts for the transfer of costs from materials to the production department?
What accounts for the transfer of costs from materials to the production department?
What must the bin card quantities agree with?
What must the bin card quantities agree with?
What type of materials can requisitions be used for?
What type of materials can requisitions be used for?
If supplies are not used in the factory, they are charged to which accounts?
If supplies are not used in the factory, they are charged to which accounts?
What is the purpose of the stock ledger card?
What is the purpose of the stock ledger card?
Study Notes
Control of Production
- Effective control maximizes manufacturing efficiency and reduces unit costs, ensuring desired inventory levels are met.
- Control of materials costs requires accurate estimates both total and per unit, facilitated through a variety of internal control forms.
Internal Control Forms
- Important forms include:
- Purchase Requisition
- Purchase Order
- Receiving Report
- Materials Requisition
- Materials Ledger Cards
- Returned Materials Report
- Scrap Report
Functions of Materials Control
- Functions are categorized into:
- Purchasing and Receiving
- Storing and Issuing
- Accounting and Valuation
Purchasing Process
- Managed by the purchasing department, typically led by a purchasing agent.
- Initiated through a purchase requisition from production department heads, detailing specific materials needed.
- Purchasing agent must understand suppliers, pricing, and terms to select optimal vendors.
Purchase Requisition
- Prepared in duplicate; original goes to the purchasing department, duplicate remains with the requester.
- Serves two purposes: notify purchasing and assign accountability for the purchase.
- Contains critical information such as quantity, description, and unit price.
Purchase Order
- Drafted in five copies for various departments (Vendor, Accounting, Materials, Receiving, Purchasing) as written authorization for vendors.
- Acts as a source document for both parties regarding the delivery of goods.
Receiving Department Responsibilities
- Accepts and checks delivered materials against vendor packing lists and purchase orders.
- Verifies quantities and types, inspects for damage, and compiles the receiving report.
Receiving Report
- Documents include purchase order number, account number, supplier details, shipment information, and inspection results.
- Prepared in four copies for Accounting, Purchasing, Materials, and a copy for the Receiving Department.
Internal Controls
- Comparing receiving reports with invoices ensures materials meet purchase order specifications, supporting solid internal controls over materials.
Payment Process
- Payment vouchers prepared by the accounting department, sent to the treasurer/cash department for vendor payment.
- Immediate reordering may occur if goods are out of stock or undelivered.
Return Shipping Order (RSO)
- Allows for returning excess materials to vendors; prepared in duplicate.
Storeroom Responsibilities
- Shift of responsibility occurs when materials move from receiving to the storeroom/warehouse.
- Storeroom clerk ensures materials are recorded and properly stored.
Materials Requisition Process
- Issued to release materials to requesting departments; can originate from several roles including department heads and production clerks.
- Accompanied by a tracking system that includes accounting for materials issued and inventory changes.
Stock Ledger Card and Returned Materials Slip
- Stock ledger tracks quantities and prices under a perpetual inventory system.
- Returned materials slip is used when excess materials are returned, often due to spoilage allowances or order adjustments.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
This quiz covers the essential aspects of production control, including effective management techniques to ensure manufacturing efficiency. It discusses key elements such as cost control, inventory levels, and the importance of internal control forms. Test your knowledge on how to maintain optimal production processes and respond to deviations.
