Question 1

Purchasing costs arise in preparing and issuing purchase orders, receiving and inspecting the items included in the orders, and matching invoices received, purchase orders, and delivery records to make payments.

Accepted Answer

A) True 
 B)False

Question 2

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.

Accepted Answer

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

Question 3

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 $50.
What is the annual relevant carrying costs?

Accepted Answer

A)  $16,308 
B)  $13,702 
C)  $10,491 
D)  $2894

Question 4

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 journal entries properly records conversion costs?

Accepted Answer

A)  
B)  
C)  
D)

Question 5

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

Question 6

Stockout costs arise when an organization experiences an ability to deliver its goods to its customers.

Accepted Answer

A) True 
 B)False

Question 7

All inventory costs are available in financial accounting systems.

Accepted Answer

A) True 
 B)False

Question 8

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

A)  
B)  
C)  
D)

Question 9

Companies that have low manufacturing lead time usually find that a version of backflush costing will report cost numbers totally different to what a sequential costing approach would report.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

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

The answer of An inventory item of Avizone Corp. has...

Question 12

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 journal entries properly records the purchase of direct materials?

Accepted Answer

A)   
B)   
C)   
D)

Question 13

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

Accepted Answer

A)  Information-gathering technology increases the reliability and timeliness of inventory information and increases the costs related to inventory. 
B)  Opportunity costs are not recorded in financial accounting systems because they are not a significant component in several cost categories. 
C)  Purchasing costs include incoming freight costs and are reduced by discounts 
D)  Opportunity costs are recorded in financial accounting systems but are a not significant component in several cost categories.

Question 14

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

Accepted Answer

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

Question 15

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

Question 16

What is a supply chain, and what are the benefits of a supply chain analysis? Provide an example of these benefits.

Accepted Answer

The answer of What is a supply chain, and what...

Question 17

What are five features of a just-in-time manufacturing system?

Accepted Answer

The answer of What are five features of a just-in-time...

Question 18

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?

Accepted Answer

A)  698.3 stuffed tigers 
B)  329.2 stuffed tigers 
C)  232.8 stuffed tigers 
D)  493.8 stuffed tigers

Question 19

Vision Company sells optical equipment. Blitz Company manufactures special glass lenses. Vision orders 11,700 lenses per year, 260 per week, at $38 per lens. Blitz covers all shipping costs. Vision earns 22% on its cash investments. The purchase-order lead time is 4.0 weeks. Vision sells 315 lenses per week. The following data are available:

What is the economic order quantity for Vision?

Accepted Answer

A)  439 lenses 
B)  356 lenses 
C)  276 lenses 
D)  195 lenses

Question 20

If Kenton Inc. has a safety stock of 215 units and the average weekly demand is 35 units, how many days can be covered if the shipment from the supplier is delayed by 16 days?

Accepted Answer

A)  16 days 
B)  43 days 
C)  59 days 
D)  27 days

Exam 20: Inventory Management, Just-in-Time, and Simplified Costing Methods

Purchasing costs arise in preparing and issuing purchase orders, receiving and inspecting the items included in the orders, and matching invoices received, purchase orders, and delivery records to make payments.

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.

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 $50. What is the annual relevant carrying costs?

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?

Stockout costs arise when an organization experiences an ability to deliver its goods to its customers.

All inventory costs are available in financial accounting systems.

Companies that have low manufacturing lead time usually find that a version of backflush costing will report cost numbers totally different to what a sequential costing approach would report.

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

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

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

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"?

What is a supply chain, and what are the benefits of a supply chain analysis? Provide an example of these benefits.

What are five features of a just-in-time manufacturing system?

If Kenton Inc. has a safety stock of 215 units and the average weekly demand is 35 units, how many days can be covered if the shipment from the supplier is delayed by 16 days?