Question 1

The EOQ model factors in the probability of stockouts.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements best defines manufacturing cycle time in a JIT production system?

Accepted Answer

A)  the time from when raw materials are received until it becomes a finished good 
B)  the time from when an order is received until it becomes a finished good 
C)  the time from when raw materials are received until it is delivered to the customers 
D)  the time from when an order is received until it is delivered to the customers 
A)  the time from when raw materials are received until it becomes a finished good 
B)  the time from when an order is received until it becomes a finished good 
C)  the time from when raw materials are received until it is delivered to the customers 
D)  the time from when an order is received until it is delivered to the customers

Question 3

An order is received by a company and then spends 1 day in assembly and 3 days in finishing before being stored in the warehouse. On average, the units are stored for 3 days before being shipped to a customer. Which of the following measures would be true?

Accepted Answer

A)  work-in-process time of 7 days 
B)  manufacturing cycle time of 4 days 
C)  pass-through time of 6 days 
D)  manufacturing cycle time of 7 days 
A)  work-in-process time of 7 days 
B)  manufacturing cycle time of 4 days 
C)  pass-through time of 6 days 
D)  manufacturing cycle time of 7 days

Question 4

JIT purchasing and production systems can be used in service industries as supplies and the labor to manage those supplies can be a significant cost element in some service organizations.

Accepted Answer

A) True 
 B)False

Question 5

The following information applies to Krynton Corp. 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 are the annual relevant ordering costs, assuming that relevant total costs are minimal?

Accepted Answer

A)  $824 
B)  $3719 
C)  $3500 
D)  $3294 
A)  $824 
B)  $3719 
C)  $3500 
D)  $3294

Question 6

Kretzinger Company makes extensive use of financial performance reports for each of its departments. Although most departments have been reporting favorable cost variances with the company's current inventory system, management is concerned about the overall performance of the purchasing department. For example, the following information is for the purchasing of materials for a product the company has been manufacturing for several years:
   
Required:
a.Compute the inventory turnover for each year. Can any conclusions be drawn for a yearly comparison of the purchase price variance and the inventory turnover?
b.Identify problems likely to be caused by evaluating purchasing only on the basis of the purchase price variance.
c.What recommendations will improve the evaluation process?

Accepted Answer

a.
 @#IMG-DLM& 
Favorable purchase prices appear t

Question 7

Which of the following statements is true of a backflush costing system?

Accepted Answer

A)  All costs are tracked sequentially as products pass through each stage of production. 
B)  When inventories are minimal, as in JIT production systems, backflush costing complicates costing systems. 
C)  Usage of a backflush costing system does not satisfy the absorption costing rules of GAAP 
D)  Backflush costing increases the ability of the accounting system to pinpoint the uses of resources at each step in the production process. 
A)  All costs are tracked sequentially as products pass through each stage of production. 
B)  When inventories are minimal, as in JIT production systems, backflush costing complicates costing systems. 
C)  Usage of a backflush costing system does not satisfy the absorption costing rules of GAAP 
D)  Backflush costing increases the ability of the accounting system to pinpoint the uses of resources at each step in the production process.

Question 8

For inventory carrying costs, which of the following statements is true of the relevant opportunity cost of capital of inventory?

Accepted Answer

A)  It is the return received by investing capital in inventory rather than elsewhere. 
B)  It is calculated as the per-unit costs of carrying inventory divided by the required rate of return . 
C)  It is the return foregone by investing capital elsewhere rather than in inventory. 
D)  It is calculated as the required rate of return multiplied by the per-unit costs of acquiring inventory including the purchase price, incoming freight, and incoming inspection. 
A)  It is the return received by investing capital in inventory rather than elsewhere. 
B)  It is calculated as the per-unit costs of carrying inventory divided by the required rate of return . 
C)  It is the return foregone by investing capital elsewhere rather than in inventory. 
D)  It is calculated as the required rate of return multiplied by the per-unit costs of acquiring inventory including the purchase price, incoming freight, and incoming inspection.

Question 9

All of the following are reasons why a company might carry a safety stock except:

Accepted Answer

A)  a buffer against unexpected increases in demand 
B)  a contingency against the uncertainty about lead time 
C)  a strategy to lower the carrying cost of inventory 
D)  a way of softening the impact of sudden unavailability of stock from suppliers 
A)  a buffer against unexpected increases in demand 
B)  a contingency against the uncertainty about lead time 
C)  a strategy to lower the carrying cost of inventory 
D)  a way of softening the impact of sudden unavailability of stock from suppliers

Question 10

A costing system that omits recording some or all of the journal entries relating to the cycle from purchase of direct materials to the sale of finished goods is called ________.

Accepted Answer

A)  dependent costing 
B)  synchronous costing 
C)  sequential costing 
D)  backflush costing 
A)  dependent costing 
B)  synchronous costing 
C)  sequential costing 
D)  backflush costing

The EOQ model factors in the probability of stockouts.

Which of the following statements best defines manufacturing cycle time in a JIT production system?

An order is received by a company and then spends 1 day in assembly and 3 days in finishing before being stored in the warehouse. On average, the units are stored for 3 days before being shipped to a customer. Which of the following measures would be true?

JIT purchasing and production systems can be used in service industries as supplies and the labor to manage those supplies can be a significant cost element in some service organizations.

Which of the following statements is true of a backflush costing system?

For inventory carrying costs, which of the following statements is true of the relevant opportunity cost of capital of inventory?

All of the following are reasons why a company might carry a safety stock except:

A costing system that omits recording some or all of the journal entries relating to the cycle from purchase of direct materials to the sale of finished goods is called ________.

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

The EOQ model factors in the probability of stockouts.

Which of the following statements best defines manufacturing cycle time in a JIT production system?

An order is received by a company and then spends 1 day in assembly and 3 days in finishing before being stored in the warehouse. On average, the units are stored for 3 days before being shipped to a customer. Which of the following measures would be true?

JIT purchasing and production systems can be used in service industries as supplies and the labor to manage those supplies can be a significant cost element in some service organizations.

Which of the following statements is true of a backflush costing system?

For inventory carrying costs, which of the following statements is true of the relevant opportunity cost of capital of inventory?

All of the following are reasons why a company might carry a safety stock except:

A costing system that omits recording some or all of the journal entries relating to the cycle from purchase of direct materials to the sale of finished goods is called ________.

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