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

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.

Miniature Company sells stuffed tigers.Birtal Inc.manufactures many different stuffed animals.Miniature orders 21,200 tigers per year,22 per week,at $10 per tiger.The manufacturer covers all shipping costs.Miniature earns 20% on its cash investments.The purchase-order lead time is 2 weeks.Miniature sells 320 tigers per week.The following data are available (based on management's estimates): What is the economic order quantity using the estimated amounts?

The economic order quantity model completely ignores ________.

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

Which of the following statements best defines lean accounting?

Globe Inc.is a distributor of DVDs.DVD Mart is a local retail outlet which sells blank and recorded DVDs.DVD Mart purchases DVDs from Globe at $28.00 per DVD;DVDs are shipped in packages of 68.Globe pays all incoming freight,and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality.Annual demand is 321,000 DVDs at a rate of 6100 DVDs per week.DVD Mart earns 11% on its cash investments.The purchase-order lead time is one week.The following cost data are available: What are the relevant total costs?

Companies that utilize backflush costing typically prorate underallocated or overallocated conversion costs between work-in-process,finished goods,and cost of goods sold.

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

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

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

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

Which of the following statements is true of costs associated with goods for sale?

The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items: Annual demand is 35,000 packages per year.The purchase price per package is $52. How many deliveries will be required at the economic order quantity?

Relevant total costs in the economic order quantity decision model equal relevant ordering costs plus which of the following costs?

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 $0.85 per ball;the golf balls are shipped in cartons of 42.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 158,520 golf balls at a rate of 3191 balls per week.Martin's Golf Supplies earns 7% on its cash investments.The purchase-order lead time is one week.The following cost data are available: If Martin's makes an order (1 / 12 of annual demand)once per month,what are the relevant total costs? (Round costs to the nearest cent and quantities to the nearest whole number. )

A push-through system that manufactures finished goods for inventory on the basis of demand forecasts and produces a master schedule for quantity and timing of units to be produced.

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. If the two trigger points are completion of good finished units of product and sale of finished goods,which of the following entries would be used to record cost of finished units completed under backflush costing? (Round intermediate calculations to the nearest cent and final calculations to the nearest dollar. )

Which of the following statements is true of the the economic order quantity decision model?

Among different types of costs associated with inventory,the costs of obtaining purchase approvals are ________.

The Allianz Company produces a specialty wood furniture product,and has the following information available concerning its inventory items: Annual demand is 33,000 packages per year.The purchase price per package is $49. What is the economic order quantity?