Question 1

If inventory consists of goods produced internally, the inventory-related costs are

Accepted Answer

A)  ordering and carrying costs. 
B)  setup costs and carrying costs. 
C)  ordering and setup costs. 
D)  both a and c. 
A)  ordering and carrying costs. 
B)  setup costs and carrying costs. 
C)  ordering and setup costs. 
D)  both a and c.

Question 2

When only one binding constraint exists, the product with the smallest contribution margin will be focused on.

Accepted Answer

A) True 
 B)False

Question 3

Southwestern Supply Company has an economic order quantity for item A of 200 units. The annual demand for the product is 5,000 units, and the cost of placing an order is $8. If the company operates 200 days a year and the lead time for the item is five days, what is the reorder point if a safety stock of 50 units is maintained?

Accepted Answer

A)  4 days 
B)  50 units 
C)  25 units 
D)  175 units 
A)  4 days 
B)  50 units 
C)  25 units 
D)  175 units

Question 4

A linear programming problem has an objective function of 12X + 14Y. If the optimal solution provided by the model is to produce and sell 500 units of X and 1,250 units of Y, the expected return is

Accepted Answer

A)  $1,750. 
B)  $23,500. 
C)  $15,000. 
D)  $27,000. 
A)  $1,750. 
B)  $23,500. 
C)  $15,000. 
D)  $27,000.

Question 5

Lexamoor Products Corporation produces two products. The manufacture of these products is partially automated. Total available labor hours are 400, and the total available machine hours are 600. Time requirements and contribution margins per unit for each product are as follows:
   Required:

Accepted Answer

The answer of Lexamoor Products Corporation produces two products. The...

Question 6

The reorder point in the EOQ model is

Accepted Answer

A)  the day of the month for reordering. 
B)  when all of the inventory has been used. 
C)  when the inventory level is below the order quantity. 
D)  the inventory level at which an order for additional units is placed. 
A)  the day of the month for reordering. 
B)  when all of the inventory has been used. 
C)  when the inventory level is below the order quantity. 
D)  the inventory level at which an order for additional units is placed.

Question 7

Figure 20 -2 Walrus Company has the following information available concerning one of its inventory items:
  Refer to Figure 20-2. The economic order quantity for this item is

Accepted Answer

A)  1,500 units. 
B)  364 units. 
C)  140 units. 
D)  725 units. 
A)  1,500 units. 
B)  364 units. 
C)  140 units. 
D)  725 units.

Question 8

The system that ensures that parts or materials are available when needed is called the __________ system.

Accepted Answer

The answer of The system that ensures that parts or...

Question 9

A marker or card that signals to a supplier the quantity of materials that need to be delivered and the time of delivery is a

Accepted Answer

A)  production Kanban. 
B)  vendor Kanban. 
C)  withdrawal Kanban. 
D)  deposit Kanban. 
A)  production Kanban. 
B)  vendor Kanban. 
C)  withdrawal Kanban. 
D)  deposit Kanban.

Question 10

Harrisburg Company uses quantitative models for inventory control. For canned syrup, the annual demand is 9,000 cases. The supplier is 500 miles away, and it usually takes 4 days to get an order filled. The average order costs $18 to process and the carrying cost per case is $42 per year. The store is open 300 days a year.
Required:

Accepted Answer

The answer of Harrisburg Company uses quantitative models for inventory...

Question 11

The cost of holding inventory is known as

Accepted Answer

A)  ordering cost. 
B)  setup cost. 
C)  stock-out cost. 
D)  carrying cost. 
A)  ordering cost. 
B)  setup cost. 
C)  stock-out cost. 
D)  carrying cost.

Question 12

Following is information pertaining to material that is used in the assembly of motorcycles:
   Required:

Accepted Answer

The answer of Following is information pertaining to material that...

Question 13

Sweet Tooth Company manufactures candy. The company buys chocolate used in the candy in 10-pound boxes that cost $10 each. The company uses 30,000 of the boxes per year, and usage occurs evenly throughout the year.
The average cost to carry a 10-pound box in inventory per year is $4, and the cost to place an order is $3.
Required:

Accepted Answer

The answer of Sweet Tooth Company manufactures candy. The company...

Question 14

JIT inventory management offers alternative solutions that require higher inventories.

Accepted Answer

A) True 
 B)False

Question 15

Ordering costs are costs of placing and receiving an order and setup costs are the costs of getting equipment and facilities to produce products.

Accepted Answer

A) True 
 B)False

Question 16

The objectives of JIT are achieved by

Accepted Answer

A)  controlling costs. 
B)  improving delivery performance. 
C)  improving quality. 
D)  all of these. 
A)  controlling costs. 
B)  improving delivery performance. 
C)  improving quality. 
D)  all of these.

Question 17

Dry Creek Company decreased the size of inventory order quantities that had previously been determined using the EOQ model. If demand remains the same, what is the impact on the number of orders made during the year?

Accepted Answer

A)  no change 
B)  increase 
C)  decrease 
D)  cannot be determined 
A)  no change 
B)  increase 
C)  decrease 
D)  cannot be determined

Question 18

The theory of constraints uses the following five steps to achieve its goal of improving organizational performance:   What is the correct order for performing these steps?

Accepted Answer

A)  3, 1, 5, 2, 4 
B)  3, 5, 1, 2, 4 
C)  1, 3, 5, 2, 4 
D)  3, 1, 5, 4, 2 
A)  3, 1, 5, 2, 4 
B)  3, 5, 1, 2, 4 
C)  1, 3, 5, 2, 4 
D)  3, 1, 5, 4, 2

Question 19

Throughput is the rate at which an organization generates money through sales.

Accepted Answer

A) True 
 B)False

Question 20

One of the traditional reasons for holding inventory is to avoid shutdowns due to defective parts. The JIT solution is to

Accepted Answer

A)  reduce setup costs. 
B)  reduce lead time. 
C)  use total preventive maintenance. 
D)  use total quality control. 
A)  reduce setup costs. 
B)  reduce lead time. 
C)  use total preventive maintenance. 
D)  use total quality control.

If inventory consists of goods produced internally, the inventory-related costs are

When only one binding constraint exists, the product with the smallest contribution margin will be focused on.

A linear programming problem has an objective function of 12X + 14Y. If the optimal solution provided by the model is to produce and sell 500 units of X and 1,250 units of Y, the expected return is

Lexamoor Products Corporation produces two products. The manufacture of these products is partially automated. Total available labor hours are 400, and the total available machine hours are 600. Time requirements and contribution margins per unit for each product are as follows: Required:

The reorder point in the EOQ model is

Figure 20 -2 Walrus Company has the following information available concerning one of its inventory items: Refer to Figure 20-2. The economic order quantity for this item is

The system that ensures that parts or materials are available when needed is called the __________ system.

A marker or card that signals to a supplier the quantity of materials that need to be delivered and the time of delivery is a

The cost of holding inventory is known as

Following is information pertaining to material that is used in the assembly of motorcycles: Required:

JIT inventory management offers alternative solutions that require higher inventories.

Ordering costs are costs of placing and receiving an order and setup costs are the costs of getting equipment and facilities to produce products.

The objectives of JIT are achieved by

Dry Creek Company decreased the size of inventory order quantities that had previously been determined using the EOQ model. If demand remains the same, what is the impact on the number of orders made during the year?

The theory of constraints uses the following five steps to achieve its goal of improving organizational performance: What is the correct order for performing these steps?

Throughput is the rate at which an organization generates money through sales.

One of the traditional reasons for holding inventory is to avoid shutdowns due to defective parts. The JIT solution is to

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Filters

Exam 20: Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

If inventory consists of goods produced internally, the inventory-related costs are

When only one binding constraint exists, the product with the smallest contribution margin will be focused on.

A linear programming problem has an objective function of 12X + 14Y. If the optimal solution provided by the model is to produce and sell 500 units of X and 1,250 units of Y, the expected return is

Lexamoor Products Corporation produces two products. The manufacture of these products is partially automated. Total available labor hours are 400, and the total available machine hours are 600. Time requirements and contribution margins per unit for each product are as follows: Required:

The reorder point in the EOQ model is

Figure 20 -2 Walrus Company has the following information available concerning one of its inventory items: Refer to Figure 20-2. The economic order quantity for this item is

The system that ensures that parts or materials are available when needed is called the __________ system.

A marker or card that signals to a supplier the quantity of materials that need to be delivered and the time of delivery is a

The cost of holding inventory is known as

Following is information pertaining to material that is used in the assembly of motorcycles: Required:

JIT inventory management offers alternative solutions that require higher inventories.

Ordering costs are costs of placing and receiving an order and setup costs are the costs of getting equipment and facilities to produce products.

The objectives of JIT are achieved by

Dry Creek Company decreased the size of inventory order quantities that had previously been determined using the EOQ model. If demand remains the same, what is the impact on the number of orders made during the year?

The theory of constraints uses the following five steps to achieve its goal of improving organizational performance: What is the correct order for performing these steps?

Throughput is the rate at which an organization generates money through sales.

One of the traditional reasons for holding inventory is to avoid shutdowns due to defective parts. The JIT solution is to

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control Key

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Filters