Question 1

Which of the following statements is true of just-in-time production systems?

Accepted Answer

A)  In a just-in-time production system, a master production schedule specifies the quantity and timing of each item to be produced. 
B)  Sales budget triggers each step of the production process in a just in time production system. 
C)  Defects arising at one workstation affect other workstations in the line quickly because of the tight links between workstations. 
D)  Production is organized in manufacturing cells in a just in time production system, which are production centers that use a "push-through" approach whereby finished goods are manufactured on the basis of demand forecasts. 
A)  In a just-in-time production system, a master production schedule specifies the quantity and timing of each item to be produced. 
B)  Sales budget triggers each step of the production process in a just in time production system. 
C)  Defects arising at one workstation affect other workstations in the line quickly because of the tight links between workstations. 
D)  Production is organized in manufacturing cells in a just in time production system, which are production centers that use a "push-through" approach whereby finished goods are manufactured on the basis of demand forecasts.

Question 2

A firm using a backflush costing system will always use actual costs rather than standard costs.

Accepted Answer

A) True 
 B)False

Question 3

Backflush costing does not strictly adhere to generally accepted accounting principles. Explain why. Also, describe the types of businesses that might use backflush costing.

Accepted Answer

The principal reason why backflush costi

Question 4

The following information applies to Krynton Company, which supplies microscopes to laboratories throughout the country. Krynton purchases the microscopes from a manufacturer which has a reputation for very high quality in its manufacturing operation.
 
What is the reorder point? (Assume a 365 day year.)

Accepted Answer

A)  1040 units 
B)  2614 units 
C)  2650 units 
D)  2944 units 
A)  1040 units 
B)  2614 units 
C)  2650 units 
D)  2944 units

Question 5

Companies that implement JIT purchasing will emphasize developing short-term supplier relationships with many suppliers to attain flexibility.

Accepted Answer

A) True 
 B)False

Question 6

The costs of storage space owned are always relevant costs of carrying inventory.

Accepted Answer

A) True 
 B)False

Question 7

What are the principles of lean accounting? Are there any limitations? Discuss.

Accepted Answer

Lean accounting is a costing method that

Question 8

Due to unprecedented growth during the year, Flowers by Kelly decided to use some of its surplus cash to increase the size of several inventory order quantities that had been previously determined using an EOQ model.
Required:
Identify whether increasing the size of inventory orders will increase, decrease, or have no effect on each of the following items.
________a.Average inventory
________b.Cost of goods sold
________c.Number of orders per year
________d.Total annual carrying costs
________e.Total annual carrying and ordering costs
________f.Total annual ordering costs

Accepted Answer

a.Increase
b.No effect
c.Decre

Question 9

The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items:
 
Annual demand is 34,000 packages per year. The purchase price per package is $51.
What is the annual relevant ordering costs?

Accepted Answer

A)  $6837 
B)  $10,428 
C)  $7873 
D)  $11,300 
A)  $6837 
B)  $10,428 
C)  $7873 
D)  $11,300

Question 10

Freight in charges forms part of purchasing costs of inventory.

Accepted Answer

A) True 
 B)False

Question 11

Proponents of lean accounting argue that the lack of individual product cost information is irrelevant because most decisions about products are made at the product line level making value stream costs more relevant than product costs.

Accepted Answer

A) True 
 B)False

Question 12

The supply chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers, regardless of whether those activities occur in the same company or in other companies.

Accepted Answer

A) True 
 B)False

Question 13

The only product of a company has an annual demand of 14,000 units. The cost of placing an order is $70 and the cost of carrying one unit in inventory for one year is $20.
Required:
Determine the economic order quantity.

Accepted Answer

The answer of The only product of a company has...

Question 14

The reorder point is the quantity level of inventory at which a new purchase order is made.

Accepted Answer

A) True 
 B)False

Question 15

Vision Company sells optical equipment. Blitz Company manufactures special glass lenses. Vision orders 11,400 lenses per year, 220 per week, at $40 per lens. Blitz covers all shipping costs. Vision earns 22% on its cash investments. The purchase-order lead time is 3.0 weeks. Vision sells 315 lenses per week. The following data are available:
 
What is the reorder point?

Accepted Answer

A)  660 lenses 
B)  945.0 lenses 
C)  1318 lenses 
D)  1605.0 lenses 
A)  660 lenses 
B)  945.0 lenses 
C)  1318 lenses 
D)  1605.0 lenses

Question 16

Globe Inc. is a distributor of DVDs. DVD Mart is a local retail outlet which sells blank and recorded DVDs. DVD Mart purchases DVDs from Globe at $29.00 per DVD; DVDs are shipped in packages of 65. Globe pays all incoming freight, and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality. Annual demand is 321,000 DVDs at a rate of 6800 DVDs per week. DVD Mart earns 15% on its cash investments. The purchase-order lead time is one week. The following cost data are available:
 
What are the annual relevant carrying costs?

Accepted Answer

A)  $9362 
B)  $9209 
C)  $849 
D)  $6511 
A)  $9362 
B)  $9209 
C)  $849 
D)  $6511

Question 17

Which of the following statements is true of just-in-time (JIT) purchasing?

Accepted Answer

A)  In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs. 
B)  JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs. 
C)  In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales. 
D)  Only disadvantage of JIT purchasing is the higher level carrying and inspection costs. 
A)  In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs. 
B)  JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs. 
C)  In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales. 
D)  Only disadvantage of JIT purchasing is the higher level carrying and inspection costs.

Question 18

The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items:
 
Annual demand is 33,000 packages per year. The purchase price per package is $49.
What is the economic order quantity?

Accepted Answer

A)  1875.37 units 
B)  1059.38 units 
C)  1498.19 units 
D)  2490.78 units 
A)  1875.37 units 
B)  1059.38 units 
C)  1498.19 units 
D)  2490.78 units

Question 19

A grouping of all the different types of equipment used to make a given product is referred to as ________.

Accepted Answer

A)  total quality management 
B)  materials requirements planning 
C)  manufacturing cells 
D)  economic order quantity 
A)  total quality management 
B)  materials requirements planning 
C)  manufacturing cells 
D)  economic order quantity

Question 20

Under economic-order-quantity decision model, which of the following is an assumption? assumed that ________.

Accepted Answer

A)  the quantity ordered can vary at each reorder point 
B)  demand, ordering costs, and carrying costs are uncertain 
C)  the purchasing cost per unit is affected by the order quantity 
D)  the same quantity is ordered at each reorder point 
A)  the quantity ordered can vary at each reorder point 
B)  demand, ordering costs, and carrying costs are uncertain 
C)  the purchasing cost per unit is affected by the order quantity 
D)  the same quantity is ordered at each reorder point

Which of the following statements is true of just-in-time production systems?

A firm using a backflush costing system will always use actual costs rather than standard costs.

Backflush costing does not strictly adhere to generally accepted accounting principles. Explain why. Also, describe the types of businesses that might use backflush costing.

Companies that implement JIT purchasing will emphasize developing short-term supplier relationships with many suppliers to attain flexibility.

The costs of storage space owned are always relevant costs of carrying inventory.

What are the principles of lean accounting? Are there any limitations? Discuss.

The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Annual demand is 34,000 packages per year. The purchase price per package is $51. What is the annual relevant ordering costs?

Freight in charges forms part of purchasing costs of inventory.

Proponents of lean accounting argue that the lack of individual product cost information is irrelevant because most decisions about products are made at the product line level making value stream costs more relevant than product costs.

The supply chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers, regardless of whether those activities occur in the same company or in other companies.

The only product of a company has an annual demand of 14,000 units. The cost of placing an order is $70 and the cost of carrying one unit in inventory for one year is $20. Required: Determine the economic order quantity.

The reorder point is the quantity level of inventory at which a new purchase order is made.

Which of the following statements is true of just-in-time (JIT) purchasing?

The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Annual demand is 33,000 packages per year. The purchase price per package is $49. What is the economic order quantity?

A grouping of all the different types of equipment used to make a given product is referred to as ________.

Under economic-order-quantity decision model, which of the following is an assumption? assumed that ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 20: Inventory Management, Just-in-Time, and Simplified Costing Methods

Which of the following statements is true of just-in-time production systems?

A firm using a backflush costing system will always use actual costs rather than standard costs.

Backflush costing does not strictly adhere to generally accepted accounting principles. Explain why. Also, describe the types of businesses that might use backflush costing.

Companies that implement JIT purchasing will emphasize developing short-term supplier relationships with many suppliers to attain flexibility.

The costs of storage space owned are always relevant costs of carrying inventory.

What are the principles of lean accounting? Are there any limitations? Discuss.

The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Annual demand is 34,000 packages per year. The purchase price per package is $51. What is the annual relevant ordering costs?

Freight in charges forms part of purchasing costs of inventory.

Proponents of lean accounting argue that the lack of individual product cost information is irrelevant because most decisions about products are made at the product line level making value stream costs more relevant than product costs.

The supply chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products to consumers, regardless of whether those activities occur in the same company or in other companies.

The only product of a company has an annual demand of 14,000 units. The cost of placing an order is $70 and the cost of carrying one unit in inventory for one year is $20. Required: Determine the economic order quantity.

The reorder point is the quantity level of inventory at which a new purchase order is made.

Which of the following statements is true of just-in-time (JIT) purchasing?

The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Annual demand is 33,000 packages per year. The purchase price per package is $49. What is the economic order quantity?

A grouping of all the different types of equipment used to make a given product is referred to as ________.

Under economic-order-quantity decision model, which of the following is an assumption? assumed that ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters