Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

The costs associated with storage are an example of which cost category?

Accepted Answer

A) quality costs 
B) labor costs 
C) ordering costs 
D) carrying costs 
A) quality costs 
B) labor costs 
C) ordering costs 
D) carrying costs D

Question 3

Answer the following questions using the information below:
The Wood Furniture company produces a specialty wood furniture product, and has the following information available concerning its inventory items:
   Annual demand is 20,000 packages per year. The purchase price per package is $32.
-What are the relevant total costs at the economic order quantity?

Accepted Answer

A) $1,414.21 
B) $4,242.65 
C) $8,485.28 
D) $9,000.00 
A) $1,414.21 
B) $4,242.65 
C) $8,485.28 
D) $9,000.00 C

Question 4

Backflush costing is a costing system that omits recording some or all of the journal entries relating to the stages from purchase of direct materials to the sales of finished goods.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following industries would have the highest cost of goods sold percentage relative to sales?

Accepted Answer

A) computer manufacturers 
B) retail organizations 
C) drug manufacturers 
D) The percentage will usually depend on the success of a particular company. 
A) computer manufacturers 
B) retail organizations 
C) drug manufacturers 
D) The percentage will usually depend on the success of a particular company.

Question 6

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

Question 7

Answer the following questions using the information below:
The following information applies to Labs Plus, which supplies microscopes to laboratories throughout the country. Labs Plus purchases the microscopes from a manufacturer which has a reputation for very high quality in its manufacturing operation.
  
-If Brian Company has a safety stock of 320 units and the average daily demand is 20 units, how many days can be covered if the shipment from the supplier is delayed by 12 days?

Accepted Answer

A) 24.0 days 
B) 20.0 days 
C) 16.0 days 
D) 13.4 days 
A) 24.0 days 
B) 20.0 days 
C) 16.0 days 
D) 13.4 days

Question 8

Which of the following is an assumption of the economic-order-quantity decision model?

Accepted Answer

A) The quantity ordered can vary at each reorder point. 
B) Demand ordering costs and carrying costs fluctuate. 
C) There will be timely labor costs. 
D) No stockouts occur. 
A) The quantity ordered can vary at each reorder point. 
B) Demand ordering costs and carrying costs fluctuate. 
C) There will be timely labor costs. 
D) No stockouts occur.

Question 9

Clothes, Inc., has an average annual demand for red, medium polo shirts of 25,000 units. The cost of placing an order is $80 and the cost of carrying one unit in inventory for one year is $25.
Required:
a. Use the economic-order-quantity model to determine the optimal order size.
b. Determine the reorder point assuming a lead time of 10 days and a work year of 250 days.
c. Determine the safety stock required to prevent stockouts assuming the maximum lead time is 20 days and the maximum daily demand is 125 units.

Accepted Answer

a. The square root of [(2 × 25

Question 10

Quality costs include:

Accepted Answer

A) purchasing costs 
B) ordering costs 
C) stockout costs 
D) prevention costs 
A) purchasing costs 
B) ordering costs 
C) stockout costs 
D) prevention costs

Question 11

Purchasing costs arise in preparing and issuing purchase orders, receiving and inspecting the items included in the orders, and matching invoices received, purchase orders, and delivery records to make payments.

Accepted Answer

A) True 
 B)False

Question 12

The costs that result when a company holds an inventory of goods for sale:

Accepted Answer

A) purchasing costs 
B) carrying costs 
C) opportunity costs 
D) interest costs 
A) purchasing costs 
B) carrying costs 
C) opportunity costs 
D) interest costs

Question 13

Increases in the carrying cost and decreases in the ordering cost per purchase order result in:

Accepted Answer

A) smaller EOQ amounts 
B) larger EOQ amounts 
C) larger relevant total costs 
D) smaller relevant total costs 
A) smaller EOQ amounts 
B) larger EOQ amounts 
C) larger relevant total costs 
D) smaller relevant total costs

Question 14

Relevant total costs in the economic-order-quantity decision model equal relevant ordering costs plus relevant:

Accepted Answer

A) carrying costs 
B) stockout costs 
C) quality costs 
D) purchasing costs 
A) carrying costs 
B) stockout costs 
C) quality costs 
D) purchasing costs

Question 15

Video Boy has one particular product that has an annual demand of 2,000 units. Total manufacturing costs per unit total $20. Ordering costs for the product total $25 per purchase order. Currently, the carrying costs per unit are 25% of manufacturing costs.
Required:
Determine the economic manufacturing order quantity.

Accepted Answer

The square root of [

Question 16

The only product of a company has an annual demand of 4,000 units. The cost of placing an order is $20 and the cost of carrying one unit in inventory for one year is $4.
Required:
Determine the economic order quantity.

Accepted Answer

The square root of [

Question 17

Answer the following questions using the information below:
Games R Us manufactures various games. For March, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when conversion costs are allocated under backflush costing.
  
-Which of the following entries properly records the cost of goods sold for the month?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 18

Answer the following questions using the information below:
The Wood Furniture company produces a specialty wood furniture product, and has the following information available concerning its inventory items:
   Annual demand is 20,000 packages per year. The purchase price per package is $32.
-How many deliveries will be required at the economic order quantity?

Accepted Answer

A) 1.00 delivery 
B) 5.10 deliveries 
C) 7.07 deliveries 
D) 14.14 deliveries 
A) 1.00 delivery 
B) 5.10 deliveries 
C) 7.07 deliveries 
D) 14.14 deliveries

Question 19

The implications of JIT and backflush costing systems for activity-based costing systems include:

Accepted Answer

A) more of the costs are direct 
B) overhead cost allocations are reduced 
C) Neither of these answers is correct. 
D) Both of these answers are correct. 
A) more of the costs are direct 
B) overhead cost allocations are reduced 
C) Neither of these answers is correct. 
D) Both of these answers are correct.

Question 20

Wilson's Deli can predict with virtual certainty the demand for its products. Wilson's sells 30 hams per week. Purchase-order lead time is 3 weeks and the economic-order quantity is 75 hams. What is the reorder point?

Accepted Answer

A) 30 hams 
B) 75 hams 
C) 90 hams 
D) 100 hams 
A) 30 hams 
B) 75 hams 
C) 90 hams 
D) 100 hams

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

The costs associated with storage are an example of which cost category?

Backflush costing is a costing system that omits recording some or all of the journal entries relating to the stages from purchase of direct materials to the sales of finished goods.

Which of the following industries would have the highest cost of goods sold percentage relative to sales?

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:

Which of the following is an assumption of the economic-order-quantity decision model?

Quality costs include:

Purchasing costs arise in preparing and issuing purchase orders, receiving and inspecting the items included in the orders, and matching invoices received, purchase orders, and delivery records to make payments.

The costs that result when a company holds an inventory of goods for sale:

Increases in the carrying cost and decreases in the ordering cost per purchase order result in:

Relevant total costs in the economic-order-quantity decision model equal relevant ordering costs plus relevant:

The only product of a company has an annual demand of 4,000 units. The cost of placing an order is $20 and the cost of carrying one unit in inventory for one year is $4. Required: Determine the economic order quantity.

The implications of JIT and backflush costing systems for activity-based costing systems include:

Wilson's Deli can predict with virtual certainty the demand for its products. Wilson's sells 30 hams per week. Purchase-order lead time is 3 weeks and the economic-order quantity is 75 hams. What is the reorder point?

The Accountants Role in the Organization

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

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

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, Time, and the Theory of Constraints

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

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

The costs associated with storage are an example of which cost category?

Backflush costing is a costing system that omits recording some or all of the journal entries relating to the stages from purchase of direct materials to the sales of finished goods.

Which of the following industries would have the highest cost of goods sold percentage relative to sales?

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:

Which of the following is an assumption of the economic-order-quantity decision model?

Quality costs include:

Purchasing costs arise in preparing and issuing purchase orders, receiving and inspecting the items included in the orders, and matching invoices received, purchase orders, and delivery records to make payments.

The costs that result when a company holds an inventory of goods for sale:

Increases in the carrying cost and decreases in the ordering cost per purchase order result in:

Relevant total costs in the economic-order-quantity decision model equal relevant ordering costs plus relevant:

The only product of a company has an annual demand of 4,000 units. The cost of placing an order is $20 and the cost of carrying one unit in inventory for one year is $4. Required: Determine the economic order quantity.

The implications of JIT and backflush costing systems for activity-based costing systems include:

Wilson's Deli can predict with virtual certainty the demand for its products. Wilson's sells 30 hams per week. Purchase-order lead time is 3 weeks and the economic-order quantity is 75 hams. What is the reorder point?

The Accountants Role in the Organization

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

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

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, Time, and the Theory of Constraints

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters