Question 1

Just-in-time systems are similar to materials requirement planning systems as both systems are demand-pull systems.

Accepted Answer

A) True 
 B)False

Question 2

The optimal safety stock level is the quantity of safety stock that minimizes the sum of the annual relevant ________.

Accepted Answer

A) stockout costs and carrying costs 
B) ordering costs and carrying costs 
C) ordering costs and stockout costs 
D) ordering costs and purchasing costs 
A) stockout costs and carrying costs 
B) ordering costs and carrying costs 
C) ordering costs and stockout costs 
D) ordering costs and purchasing costs

Question 3

Which of the following term is defined as: "the flow of goods,services,and information from the initial sources of materials and services to the delivery of products to consumers"?

Accepted Answer

A) customer list 
B) enterprise requirements plan (ERP) 
C) material requirements plan (MRP) 
D) supply chain 
A) customer list 
B) enterprise requirements plan (ERP) 
C) material requirements plan (MRP) 
D) supply chain

Question 4

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 $1.15 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 158,520 golf balls at a rate of 3891 balls per week.Martin's Golf Supplies earns 8% on its cash investments.The purchase-order lead time is one week.The following cost data are available:
 
What is the economic order quantity? (Round costs to the nearest cent and quantities to the nearest whole number. )

Accepted Answer

A) 183 cartons 
B) 274 cartons 
C) 275 cartons 
D) 367 cartons 
A) 183 cartons 
B) 274 cartons 
C) 275 cartons 
D) 367 cartons

Question 5

The executive vice president of Robotics,Inc. ,is concerned because the cost of materials has not been in line with the budget for several periods,even after implementing an EOQ model.The company has the normal direct material variance computations of price and efficiency at the end of each month.The price variance of the direct materials used is usually near expectations.The vice president does not understand how the budget differences are always larger than the material price variances.
Required:
What explanation can you give for the evaluation problems presented?

Accepted Answer

An EOQ model does not solve all inventor

Question 6

The costs that result from theft of inventory are ________.

Accepted Answer

A) shrinkage costs 
B) external failure costs 
C) stockout costs 
D) costs of quality 
A) shrinkage costs 
B) external failure costs 
C) stockout costs 
D) costs of quality

Question 7

The cost of breakage and obsolescence are relevant incremental costs of carrying inventory.

Accepted Answer

A) True 
 B)False

Question 8

Inventory management is the planning,organizing,and controlling activities that focus on the flow of materials into,through,and out of the organization.

Accepted Answer

A) True 
 B)False

Question 9

Delinz Company sells 115 hams per week.Purchase-order lead time is 6 weeks and the economic-order quantity is 210 hams.What is the reorder point?

Accepted Answer

A) 1950 hams 
B) 690 hams 
C) 1260 hams 
D) 210 hams 
A) 1950 hams 
B) 690 hams 
C) 1260 hams 
D) 210 hams

Question 10

Which of the following statements is true of a backflush costing system?

Accepted Answer

A) All costs are tracked sequentially as products pass through each stage of production. 
B) When inventories are minimal,as in JIT production systems,backflush costing complicates costing systems. 
C) Usage of a backflush costing system does not satisfy the absorption costing rules of GAAP 
D) Backflush costing increases the ability of the accounting system to pinpoint the uses of resources at each step in the production process. 
A) All costs are tracked sequentially as products pass through each stage of production. 
B) When inventories are minimal,as in JIT production systems,backflush costing complicates costing systems. 
C) Usage of a backflush costing system does not satisfy the absorption costing rules of GAAP 
D) Backflush costing increases the ability of the accounting system to pinpoint the uses of resources at each step in the production process.

Question 11

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.
 
Which of the following journal entries would be recorded when units are sold for the month under backflush costing? Please round intermediate calculations to two decimal places (i.e. ,unit costs)

Accepted Answer

B
Explanation:
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Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Which of the following costs is a relevant inventory carrying cost of carrying inventory?

Accepted Answer

A) The lost contribution margin on future sales forgone as a result of customer dissatisfaction in product quality. 
B) The lost contribution margin on sales forgone because of the shortage of inventory. 
C) The costs of storage space owned that cannot be used for other profitable purposes when inventories decrease. 
D) The costs of shrinkage. 
A) The lost contribution margin on future sales forgone as a result of customer dissatisfaction in product quality. 
B) The lost contribution margin on sales forgone because of the shortage of inventory. 
C) The costs of storage space owned that cannot be used for other profitable purposes when inventories decrease. 
D) The costs of shrinkage.

Question 14

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.
 
Assuming each order was made at the economic order quantity amount,what is the cost of placing an order?

Accepted Answer

A) $850 per order 
B) $153 per order 
C) $144 per order 
D) $900 per order 
A) $850 per order 
B) $153 per order 
C) $144 per order 
D) $900 per order

Question 15

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 $29.00 per DVD;DVDs are shipped in packages of 65.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 6800 DVDs per week.DVD Mart earns 15% on its cash investments.The purchase-order lead time is one week.The following cost data are available:
 
What are the annual relevant carrying costs?

Accepted Answer

A) $9362 
B) $9209 
C) $849 
D) $6511 
A) $9362 
B) $9209 
C) $849 
D) $6511

Question 16

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

Accepted Answer

A) In JIT purchasing,the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs. 
B) JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs. 
C) In JIT purchasing,raw materials (or goods)are purchased so that products are delivered just as needed for production or sales. 
D) Only disadvantage of JIT purchasing is the higher level carrying and inspection costs. 
A) In JIT purchasing,the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs. 
B) JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs. 
C) In JIT purchasing,raw materials (or goods)are purchased so that products are delivered just as needed for production or sales. 
D) Only disadvantage of JIT purchasing is the higher level carrying and inspection costs.

Question 17

The purchase-order lead time is the ________.

Accepted Answer

A) time between placing an order and its delivery 
B) time between receiving a customer order and producing the products 
C) time between receiving a customer order and delivering the items 
D) time required to correct errors in the defective products 
A) time between placing an order and its delivery 
B) time between receiving a customer order and producing the products 
C) time between receiving a customer order and delivering the items 
D) time required to correct errors in the defective products

Question 18

A successful implementation of a JIT production system should result in a lowering of the inventory turnover ratio.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) purchasing costs 
B) ordering costs 
C) stockout costs 
D) carrying costs 
A) purchasing costs 
B) ordering costs 
C) stockout costs 
D) carrying costs

Question 20

Freight in charges forms part of purchasing costs of inventory.

Accepted Answer

A) True 
 B)False

Just-in-time systems are similar to materials requirement planning systems as both systems are demand-pull systems.

The optimal safety stock level is the quantity of safety stock that minimizes the sum of the annual relevant ________.

Which of the following term is defined as: "the flow of goods,services,and information from the initial sources of materials and services to the delivery of products to consumers"?

The costs that result from theft of inventory are ________.

The cost of breakage and obsolescence are relevant incremental costs of carrying inventory.

Inventory management is the planning,organizing,and controlling activities that focus on the flow of materials into,through,and out of the organization.

Delinz Company sells 115 hams per week.Purchase-order lead time is 6 weeks and the economic-order quantity is 210 hams.What is the reorder point?

Which of the following statements is true of a backflush costing system?

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

Which of the following costs is a relevant inventory carrying cost of carrying inventory?

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

The purchase-order lead time is the ________.

A successful implementation of a JIT production system should result in a lowering of the inventory turnover ratio.

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

Freight in charges forms part of purchasing costs of inventory.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

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

Just-in-time systems are similar to materials requirement planning systems as both systems are demand-pull systems.

The optimal safety stock level is the quantity of safety stock that minimizes the sum of the annual relevant ________.

Which of the following term is defined as: "the flow of goods,services,and information from the initial sources of materials and services to the delivery of products to consumers"?

The costs that result from theft of inventory are ________.

The cost of breakage and obsolescence are relevant incremental costs of carrying inventory.

Inventory management is the planning,organizing,and controlling activities that focus on the flow of materials into,through,and out of the organization.

Delinz Company sells 115 hams per week.Purchase-order lead time is 6 weeks and the economic-order quantity is 210 hams.What is the reorder point?

Which of the following statements is true of a backflush costing system?

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

Which of the following costs is a relevant inventory carrying cost of carrying inventory?

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

The purchase-order lead time is the ________.

A successful implementation of a JIT production system should result in a lowering of the inventory turnover ratio.

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

Freight in charges forms part of purchasing costs of inventory.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters