Exam 17: Inventory Management, Just-In-Time and Simplified Costing Methods

In a just-in-time system,suppliers are selected primarily on the basis of their ability to provide materials and products at the lowest possible price.

As it pertains to purchase orders,what are requirements of just-in-time systems? Variant question

The ________ describes the flow of goods,services,and information from the initial sources of materials and services to the delivery of products to consumers.

Decreases in the ordering cost per purchase order and increases in the carrying result in: Variant question

Retailers often hold a fixed level of safety stock to make sure they will be able to fulfil customers' needs,when they are uncertain about demand for their products or availability of their products from the suppliers. Variant question

A materials requirement planning system that manufactures finished goods for inventory on the basis of demand forecasts can be described as a 'demand-pull' system.

Answer the following questions using the information below: The Katoomba Furniture company produces a specialty dining table,and has the following information available concerning its inventory items: Relevant ordering costs per purchase order \ 250 Relevant carrying costs per year: Required annual return on investment 10\% Required other costs per year \ 14.00 Annual demand is 1000 tables per year.The purchase price per table is $1600. -What is the economic order quantity (EOQ)?

Lean accounting:

Corry Corporation manufactures filters for cars,vans,and trucks.A backflush costing system is used and standard costs for a filter are as follows: Direct materials \ 2.60 Conversion costs 4.20 Total \ 6.80 Filters are scheduled for production only after orders are received,and are shipped immediately upon completion.This results in product costs being charged directly to cost of goods sold.In December,3000 filters were produced and shipped.Materials were purchased at a cost of $8450 and actual conversion costs of $13 650 were recorded. Required: Prepare journal entries to record December's costs for the production of the filters. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Answer the following questions using the information below: Appleby Incorporated is a distributor of golf balls.Kel's Golf Supplies is a local retail outlet which sells golf balls.Kel's purchases the golf balls from Appleby Incorporated at $0.75 per ball;the golf balls are shipped in cartons of 72.Appleby Incorporated pays all incoming freight,and Kel's Golf Supplies does not inspect the balls due to Appleby' reputation for high quality.Annual demand is 172 800 golf balls at a rate of 3322 balls per week.Kel's Golf Supplies earns 12% on its cash investments.The purchase-order lead time is one week.The following cost data are available: Relevant ordering costs per purchase order $\quad\quad\quad\$ 125.00$ Carrying costs per carton per year: Relevant insurance, materials handling, breakage, etc,, per year $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\$ 0.77$ -Purchasing at the EOQ recommended level,how many deliveries will be made during each time period?

Lean accounting is a costing method that supports creating value for the customer by costing the entire value stream,not individual products or departments,thereby eliminating waste in the accounting process.

What are the annual relevant carrying costs of inventory comprised of? Variant question

In a just-in-time inventory system,there is less emphasis on the need to eliminate scrap and rework problems.

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 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

Queensland Electronics manufactures stereos.All processing is initiated when an order is received.For April there were no beginning inventories.Conversion Costs and Direct Materials are the only manufacturing cost accounts.Direct Materials are purchased under a just-in-time system.Backflush costing is used with a finished goods trigger point.Additional information is as follows: Actual conversion costs \ 464000 Standard materials costs per unit \ 90 Standard conversion cost per unit \ 210 Units produced 4800 Units sold 4200 Required: Record all journal entries for the monthly activities related to the above transactions if backflush costing is used. _____________________________________________________________________________________________ _____________________________________________________________________________________________

In managing inventories,the costs of preparing,issuing,and paying purchase orders,plus receiving and inspecting the items included in orders are known as:

When using a vendor-managed inventory system to enhance the features of supply chain management,a challenging issue is:

Costs of setting up a production run are analogous to ordering costs in the Economic Order Quantity (EOQ)model.

What is the time required to get equipment,tools,and materials ready to start production called? Variant question

If Freemantle Engineering Company has a safety stock of 36 units of a particular item and the average monthly demand is 270 units,how many days can be covered if the shipment from the supplier is delayed by 12 days? Assume a 360 day year.