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

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.

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. Conversion costs - March \ 400,000 Direct materials purchased - March \ 1,070,000 Units produced - March 58,800 Units sold - March 41,800 -Which of the following entries properly records the cost of goods sold for the month?

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. Conversion costs - March \ 400,000 Direct materials purchased - March \ 1,070,000 Units produced - March 58,800 Units sold - March 41,800 -Which of the journal entries properly records conversion costs?

Which of the following statements best defines an enterprise resource planning (ERP)system?

To determine the Economic Order Quantity,the relevant ordering costs are maximized and the relevant carrying costs are minimized.

A demand-pull system in which each component in a production line is produced immediately as needed by the next step in the production line is referred to as ________.

Answer the following questions using the information below: Vision Company sells optical equipment. Blitz Company manufactures special glass lenses. Vision orders 11,400 lenses per year, 200 per week, at $35 per lens. Blitz covers all shipping costs. Vision earns 25% on its cash investments. The purchase-order lead time is 2.5 weeks. Vision sells 225 lenses per week. The following data are available: Relevant ordering costs per purchase order \4 1.25 Relevant insurance, materials handling, breakage, and so on, per year 4.50 -What is the economic order quantity for Vision?

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 ________.

A system that comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities is known as a(n)________.

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.

How many deliveries will be required at the economic order quantity?

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

The management accountant aids in MRP by ________.

Just-in-time purchasing 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 organization or in other organizations.

The annual relevant carrying costs of inventory consists of the sum of the ________.

What are the implications of JIT and backflush costing systems for activity-based costing (ABC)systems?

Companies use safety stock as a buffer against unexpected decreases in demand.

What are five features of a just-in-time manufacturing system?

The Jarvis Corporation produces bucket loader assemblies for the tractor industry.The product has a long term life expectancy.Jarvis has a traditional manufacturing and inventory system.Jarvis is considering the installation of a just-in-time inventory system to improve its cost structure.In doing a full study using its manufacturing engineering team as well as consulting with industry JIT experts and the main vendors and suppliers of the components Jarvis uses to manufacture the bucket loader assemblies,the following incremental cost-benefit relevant information is available for analysis: The Jarvis cost of investment capital hurdle rate is 15%. One time cost to rearrange the shop floor to create the manufacturing cell workstations is $275,000. One time cost to retrain the existing workforce for the JIT required skills is $60,000. Anticipated defect reduction is 40%.Currently there is a cost of quality defect assessment listed as $150,000 per year. The setup time for each of the existing functions will be reduced by 67%.Currently the forecast for setup costs are $225,000 per year. Jarvis will expect to save $200,000 per year in carrying costs as a result of having a lower inventory. The suppliers will require a 15% premium over the current level of prices in order to position themselves to supply the material on a smaller and more frequent schedule.Currently the materials purchases are $1,500,000 per year. Required: Determine whether it is in the best interest of Jarvis Corporation to install a JIT system.

Discuss considerations that should be fully taken into account when developing inventory related relevant costs for use in an economic order quantity (EOQ)model.