Question 1

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

Accepted Answer

A) Appraisal costs is a subcategory of shrinkage costs. 
B) Special processing costs are always part of purchasing costs. 
C) Opportunity costs are not recorded in the accounting system. 
D) Stockout costs are costs that arise when a company runs out of a particular item for which there is no customer demand. 
A) Appraisal costs is a subcategory of shrinkage costs. 
B) Special processing costs are always part of purchasing costs. 
C) Opportunity costs are not recorded in the accounting system. 
D) Stockout costs are costs that arise when a company runs out of a particular item for which there is no customer demand.

Question 2

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 properly reflects the purchase of materials under backflush costing?

Accepted Answer

The answer of Vision Company manufactures digital cameras.For May,there were...

Question 3

Which of the following statements best defines setup time?

Accepted Answer

A) It is the time required to manufacture an item,including order preparation time,inspection time,and customer delivery time. 
B) It is the time required to get equipment,tools,and materials ready to start the production of a component or product. 
C) It is a time or period ranging from the time when a customer orders goods to the time when they are delivered to the customer. 
D) It is the time required to create a new product to be sold by a business to its customers. 
A) It is the time required to manufacture an item,including order preparation time,inspection time,and customer delivery time. 
B) It is the time required to get equipment,tools,and materials ready to start the production of a component or product. 
C) It is a time or period ranging from the time when a customer orders goods to the time when they are delivered to the customer. 
D) It is the time required to create a new product to be sold by a business to its customers.

Question 4

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 ________.

Accepted Answer

A) just-in-time production 
B) materials requirements planning 
C) relevant total costs 
D) economic order quantity 
A) just-in-time production 
B) materials requirements planning 
C) relevant total costs 
D) economic order quantity

Question 5

An inventory item of Avizone Corp.has an average daily demand of 25 units with a maximum daily demand of 30 units.The economic order quantity is 500 units.Without safety stocks,the reorder point is 125 units.Safety stocks are set at 235 units.
Required:
a.Determine the reorder point with safety stocks.
b.Determine the maximum inventory level.
c.Determine the average lead time.

Accepted Answer

a.
 @#IMG-DLM&_TB5540_00_TB5540_00 b.
 @#IMG-DLM&_

Question 6

Under backflush costing approach where three trigger points are used (stage A,stage C,and stage D),the purchase of materials is:

Accepted Answer

A) credited to the Materials and In-Process Inventory Control account 
B) debited to the Materials and In-Process Inventory Control account 
C) debited to the Materials Inventory Control account 
D) ignored because the manufacturing process moves so quickly from acquisition of materials to the sale of the finished good 
A) credited to the Materials and In-Process Inventory Control account 
B) debited to the Materials and In-Process Inventory Control account 
C) debited to the Materials Inventory Control account 
D) ignored because the manufacturing process moves so quickly from acquisition of materials to the sale of the finished good

Question 7

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.

Accepted Answer

A) True 
 B)False

Question 8

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 are the relevant total costs at the economic order quantity?

Accepted Answer

A) $18,780 
B) $20,387 
C) $11,223 
D) $12,694 
A) $18,780 
B) $20,387 
C) $11,223 
D) $12,694

Question 9

The IBP Grocery orders most of its items in lot sizes of 10 units.Average annual demand per side of beef is 720 units per year.Ordering costs are $25 per order with an average purchasing price of $100.Annual inventory carrying costs are estimated to be 40% of the unit cost.
Required:
a.Determine the economic order quantity.
b.Determine the annual cost savings if the shop changes from an order size of 10 units to the economic order quantity.
c.Since the shelf life is limited,the IBP Grocery must keep the inventory moving.Assuming a 360-day year,determine the optimal lot size under each of the following: (1)a 20-day shelf life and (2)a 10-day shelf life.

Accepted Answer

a.The square root of [(2 × 720

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The journal entry to dispose of the difference between actual conversion costs incurred and standard conversion costs allocated is different under backflush costing and sequential tracking.

Accepted Answer

A) True 
 B)False

Question 12

Due to unprecedented growth during the year,Flowers by Kelly decided to use some of its surplus cash to increase the size of several inventory order quantities that had been previously determined using an EOQ model.
Required:
Identify whether increasing the size of inventory orders will increase,decrease,or have no effect on each of the following items.

Accepted Answer

a.Increase
b.No effect
c.Decre

Question 13

The EOQ model factors in the probability of stockouts.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is the best definition of inventory management?

Accepted Answer

A) planning and control of the flow inventory into and through an organization 
B) planning,coordinating,and controlling activities related to the flow of inventory into,through,and out of an organization 
C) planning and coordinating activities related to the flow of inventory into and through an organization 
D) planning,coordinating,and control of inventory into an organization 
A) planning and control of the flow inventory into and through an organization 
B) planning,coordinating,and controlling activities related to the flow of inventory into,through,and out of an organization 
C) planning and coordinating activities related to the flow of inventory into and through an organization 
D) planning,coordinating,and control of inventory into an organization

Question 15

The only product of a company has an annual demand of 14,000 units.The cost of placing an order is $70 and the cost of carrying one unit in inventory for one year is $20.
Required:
Determine the economic order quantity.

Accepted Answer

= 313.05 u

Question 16

The reorder point is the quantity level of inventory at which a new purchase order is made.

Accepted Answer

A) True 
 B)False

Question 17

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.
 
What is the reorder point? (Assume a 365 day year. )

Accepted Answer

A) 1040 units 
B) 2614 units 
C) 2650 units 
D) 2944 units 
A) 1040 units 
B) 2614 units 
C) 2650 units 
D) 2944 units

Question 18

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)________.

Accepted Answer

A) economic order quantity (EOQ)system 
B) enterprise resource planning (ERP)system 
C) just-in-time (JIT)system 
D) material requirements planning (MRP)system 
A) economic order quantity (EOQ)system 
B) enterprise resource planning (ERP)system 
C) just-in-time (JIT)system 
D) material requirements planning (MRP)system

Question 19

Vision Enterprises manufactures converter boxes for high definition TVs.All processing is initiated when an order is received.For March 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:
   
Required:
Record all journal entries for the monthly activities related to the above transactions if backflush costing is used.

Accepted Answer

To record actual conversion co

Question 20

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.
 
Which of the following entries properly records the cost of goods sold for the month?

Accepted Answer

B
Explanation:(Conversion cost

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

Which of the following statements best defines setup time?

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 ________.

Under backflush costing approach where three trigger points are used (stage A,stage C,and stage D),the purchase of materials is:

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 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 are the relevant total costs at the economic order quantity?

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

The journal entry to dispose of the difference between actual conversion costs incurred and standard conversion costs allocated is different under backflush costing and sequential tracking.

The EOQ model factors in the probability of stockouts.

Which of the following is the best definition of inventory management?

The only product of a company has an annual demand of 14,000 units.The cost of placing an order is $70 and the cost of carrying one unit in inventory for one year is $20. Required: Determine the economic order quantity.

The reorder point is the quantity level of inventory at which a new purchase order is made.

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)________.

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

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

Which of the following statements best defines setup time?

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 ________.

Under backflush costing approach where three trigger points are used (stage A,stage C,and stage D),the purchase of materials is:

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 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 are the relevant total costs at the economic order quantity?

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

The journal entry to dispose of the difference between actual conversion costs incurred and standard conversion costs allocated is different under backflush costing and sequential tracking.

The EOQ model factors in the probability of stockouts.

Which of the following is the best definition of inventory management?

The only product of a company has an annual demand of 14,000 units.The cost of placing an order is $70 and the cost of carrying one unit in inventory for one year is $20. Required: Determine the economic order quantity.

The reorder point is the quantity level of inventory at which a new purchase order is made.

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)________.

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