Exam 20: Inventory Management, just-In-Time, and Simplified Costing Methods

Answer the following questions using the information below: Vision Company manufactures digital cameras. For May, 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 units are sold. Conversion costs - May \ 100,625 Direct materials purchased - May \ 253,575 Units produced - May 80,500 units Units sold - May 77,500 units Selling price \ 20 each -Which of the following journal entries properly reflects the purchase of materials under backflush costing?

Which of the following statements best defines a just-in-time production system?

Managing inventories to increase net income requires companies to effectively manage costs associated with goods for sale. Required: Classify the below listed items as either Purchasing Costs,Ordering Costs,Carrying Costs,Stockout Costs,Costs of Quality,or Shrinkage Costs. ___a. costs of obtaining purchase approvals ___b. costs resulting from embezzlement by employees ___c. internal failure costs ___d. opportunity cost of the investment tied up in inventory ___e. costs associated with storage ___f. costs of lost sales as a result of not having an item requested by a customer ___g. freight-in charges ___h. special processing costs ___i. costs of wages for work-int-process inspections ___j. costs that result from misclassifications and clerical errors

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. Annual demand (weekly demand =1/52 of annual demand) 52,000 units Orders per year 20 Lead time in days 15 days Cost of placing an order \ 100 What is the reorder point?

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

Answer the following questions using the information below: 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. Annual demand (weekly demand =1/52 of annual demand) 13,000 units Orders per year as per EOQ model 13 Lead time in days 15 days Annual relevant carrying costs \ 2,600 -What is the economic order quantity assuming each order was made at the economic-order-quantity amount?

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

The opportunity cost of the stockout includes lost contribution margin on the sale not made plus any contribution margin lost on future sales due to customer ill will.

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

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.

Answer the following questions using the information below: The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Relevant ordering costs per purchase order \4 50 Relevant carrying costs per year for each package: Required annual return on investment 15\% Required other costs per wear \4 Annual demand is 30,000 packages per year. The purchase price per package is $48. -What is the annual relevant ordering costs?

A push-through system that manufactures finished goods for inventory on the basis of demand forecasts is referred to as ________.

Why do conflicts arise between the EOQ model's optimal order quantity and the order quantity that managers regard as optimal?

Answer the following questions using the information below: 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. Annual demand (weekly demand =1/52 of annual demand) 13,000 units Orders per year as per EOQ model 13 Lead time in days 15 days Annual relevant carrying costs \ 2,600 -Assuming each order was made at the economic order quantity amount,what is the cost of placing an order?

Answer the following questions using the information below: The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Relevant ordering costs per purchase order \4 50 Relevant carrying costs per year for each package: Required annual return on investment 15\% Required other costs per wear \4 Annual demand is 30,000 packages per year. The purchase price per package is $48. -What is the economic order quantity?

Answer the following questions using the information below: Short Grass Incorporated is a distributor of golf balls. Martin's Golf Supplies is a local retail outlet which sells golf balls. Martin's purchases the golf balls from Short Grass Incorporated at $0.75 per ball; the golf balls are shipped in cartons of 72. Short Grass Incorporated pays all incoming freight, and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality. Annual demand is 155,520 golf balls at a rate of 2,991 balls per week. Martin'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 \1 25.00 arrying costs per carton per year: Relevant insurance, materials handling, breakage, etc., per year \0 .77 -If Martin's makes an order (1/12 of annual demand)once per month,what are the relevant total costs?

Lean accounting is much simpler than traditional product costing because ________.

Answer the following questions using the information below: 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. Annual demand (weekly demand =1/52 of annual demand) 13,000 units Orders per year as per EOQ model 13 Lead time in days 15 days Annual relevant carrying costs \ 2,600 -What are the annual relevant ordering costs,assuming that relevant total costs are minimal?

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