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

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

A positive aspect of backflush costing is the presence of the visible audit trail.

Among different types of costs associated with inventory,the incoming freight charges of inventories are ________.

Which of the following statements best defines setup time?

Which of the following statements is true of Allianz's EOQ system costs?

Under backflush costing approach,the purchase of materials is ________.

Lean accounting takes in to consideration all costs associated with inventories.

Which of the following statements is true of just-in-time (JIT)purchasing?

Shrinkage is measured by adding (a)the cost of the inventory recorded on the books in the absence of theft and other incidents just mentioned,and (b)the cost of inventory when physically counted.

Ralph was in the process of completing the quarterly planning for the purchasing department when a major computer malfunction lost most of his data.For direct material XXX he was able to recover the following: Average inventory level of XXX 200 Orders per year 40 Average daily demand 48 Working days per year 250 Annual ordering costs \ 4,000 Annual carrying costs \ 6,000 Ralph purchases at the EOQ quantity level. Required: Determine the annual demand,the cost of placing an order,the annual carrying cost of one unit,and the economic order quantity.

Among different types of costs associated with inventory,the opportunity cost of the investment tied up in inventory is a(n)________.

The manufacturing manager of New Technology Company is concerned about the company's newest plant.When the plant began operations three years ago,it had the best of everything.It had modern equipment,well-trained employees,engineered work and assembly stations,and a controlled environment.During the first two years,the evaluation results were very good with almost all cost variances being favorable.However,recently,things have turned negative. In recent months,everything seems to be operating in a crisis management mode.Although most cost variances remain favorable,the plant's segment contribution is declining and customers are complaining about poor quality and slow delivery.Several customers have suggested that they may take their business elsewhere if things do not improve. The shop floor is in continual turmoil.In-process inventory is everywhere,production employees have difficulty finding jobs that need to be worked on,and scheduling has requested a larger computer to keep track of work in process. The vice president of sales does not know where to begin with solving the customers' problems.It seems that everyone is working very hard and the plant has the best facilities and trained employees in the industry. Required: What is the nature of the plant's problems? What recommendation would you make to help improve the situation?

Which of the following statements best defines manufacturing cells?

Which of the following statements is true of the financial and nonfinancial measures in just-in-time production systems?

Which of the following is the correct mathematical expression to calculate annual relevant ordering costs?

All inventory costs are available in financial accounting systems.

For supply item ABC,Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly.A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements.She has gathered the following information: Annual demand in units 250 Days used per year 250 Lead time, in days 10 Ordering costs \ 100 Annual unit carrying costs \ 20 Required: Determine the EOQ,average inventory,orders per year,average daily demand,reorder point,annual ordering costs,and annual carrying costs.

Sharing sales information throughout the supply chain leads to ________.

Tornado 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 \ 232,000 Standard materials costs per unit 60 Standard conversion cost per unit 140 Units produced 3,200 Units sold 2,800 Required: Record all journal entries for the monthly activities related to the above transactions if backflush costing is used.

Miniature Company sells stuffed tigers.Birtal Inc.manufactures many different stuffed animals.Miniature orders 20,800 tigers per year,400 per week,at $15 per tiger.The manufacturer covers all shipping costs.Miniature earns 15% on its cash investments.The purchase-order lead time is 3 weeks.Miniature sells 310 tigers per week.The following data are available (based on management's estimates): Estimated ordering costs per purchase order \2 2 Estimated insurance, materials handling, breakage, and so on, per year \ 7 Actual ordering costs per order \ 25 What is the economic order quantity using the estimated amounts?