b. What control procedures should be included in the system? A large number of controls are possible, including the following: Access Control - User ID and Password Compatibility Test - Password Preformatting or Prompting -All Data Entered Record Count - # of Transactions Validity Check - Product Code Number Limit Check - Production Quantity Field Check - Production Date Field Check - Quantity Completeness Test - Each Record File Library - Log Master Files External Labels - Master Header Labels - Master Files Backup Copy - Operations List and Bill of Materials Backup Copy - Production Orders Record - # of Operations Sequentially Numbered Product Orders Reasonableness Check - Date Completed versus date started Validity Check - Employee Number Reasonableness Test - Elapsed Time 14.6 The XYZ company’s current production processes have a scrap rate of 15% and a return rate of 3%. Scrap costs (wasted materials) are $12 per unit; warranty/repair costs average $60 per unit returned. The company is considering the following alternatives to improve its production processes: Option A: Invest $400,000 in new equipment. The new process will also require an additional $1.50 of raw materials per unit produced. This option is predicted to reduce both scrap rates return rates by 40% from current levels. Option B: Invest $50,000 in new equipment, but spend an additional $3.20 on higher quality raw materials per unit produced. This option is predicted to reduce both scrap and return rates by 90% from current levels. Option C: Invest $2,000,000 in new equipment. The new process will require no change in raw materials. This option is predicted to reduce both scrap and
b. What control procedures should be included in the system? A large number of controls are possible, including the following: Access Control - User ID and Password Compatibility Test - Password Preformatting or Prompting -All Data Entered Record Count - # of Transactions Validity Check - Product Code Number Limit Check - Production Quantity Field Check - Production Date Field Check - Quantity Completeness Test - Each Record File Library - Log Master Files External Labels - Master Header Labels - Master Files Backup Copy - Operations List and Bill of Materials Backup Copy - Production Orders Record - # of Operations Sequentially Numbered Product Orders Reasonableness Check - Date Completed versus date started Validity Check - Employee Number Reasonableness Test - Elapsed Time 14.6 The XYZ company’s current production processes have a scrap rate of 15% and a return rate of 3%. Scrap costs (wasted materials) are $12 per unit; warranty/repair costs average $60 per unit returned. The company is considering the following alternatives to improve its production processes: Option A: Invest $400,000 in new equipment. The new process will also require an additional $1.50 of raw materials per unit produced. This option is predicted to reduce both scrap rates return rates by 40% from current levels. Option B: Invest $50,000 in new equipment, but spend an additional $3.20 on higher quality raw materials per unit produced. This option is predicted to reduce both scrap and return rates by 90% from current levels. Option C: Invest $2,000,000 in new equipment. The new process will require no change in raw materials. This option is predicted to reduce both scrap and