Question 1

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 2

Beryl Company sells 900 flash drives per week. Purchase-order lead time is 2 weeks and the economic-order quantity is 1625 units. What is the reorder point?

Accepted Answer

A)  3250 units 
B)  1450 units 
C)  1800 units 
D)  1625 units 
A)  3250 units 
B)  1450 units 
C)  1800 units 
D)  1625 units

Question 3

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?

Accepted Answer

A)  16.36 deliveries 
B)  15.91 deliveries 
C)  20.12 deliveries 
D)  23.14 deliveries 
A)  16.36 deliveries 
B)  15.91 deliveries 
C)  20.12 deliveries 
D)  23.14 deliveries

Question 4

Sharing sales information throughout the supply chain leads to which of the following?

Accepted Answer

A)  larger stockouts 
B)  increased manufacturing of products not immediately needed by retailers 
C)  fewer manufacturing orders that had to be expedited 
D)  higher inventories held by each company in the supply chain 
A)  larger stockouts 
B)  increased manufacturing of products not immediately needed by retailers 
C)  fewer manufacturing orders that had to be expedited 
D)  higher inventories held by each company in the supply chain

Question 5

A company's inventory levels are dependent on a number of variables including the demand for the product, supplier relationships, and supplier relationships with their manufacturers.

Accepted Answer

A) True 
 B)False

Question 6

Managing inventories to increase net income requires companies to effectively manage costs associated with goods for sale.
Required:
Classify the below listed items as either Purchasing Costs, Ordering Costs, Carrying Costs, Stockout Costs, Costs of Quality, or Shrinkage Costs.
________a.costs of obtaining purchase approvals
________b.costs resulting from embezzlement by employees
________c.internal failure costs
________d.opportunity cost of the investment tied up in inventory
________e.costs associated with storage
________f.costs of lost sales as a result of not having an item requested by a customer
________g.freight-in charges
________h.special processing costs
________i.costs of wages for work-in-process inspections
________j.costs that result from misclassifications and clerical errors

Accepted Answer

a.Ordering Costs
b.Shrinkage C

Question 7

Which of the following statements is true of the financial and nonfinancial measures in just-in-time production systems?

Accepted Answer

A)  The inventory turnover ratio is expected to decrease. 
B)  Units produced per hour are expected to increase. 
C)  Manufacturing cycle time is expected to increase. 
D)  Total setup time for machines with respect to total manufacturing time is expected to increase. 
A)  The inventory turnover ratio is expected to decrease. 
B)  Units produced per hour are expected to increase. 
C)  Manufacturing cycle time is expected to increase. 
D)  Total setup time for machines with respect to total manufacturing time is expected to increase.

Question 8

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 9

Which of the following statements best defines backflush costing system?

Accepted Answer

A)  an integrated costing system covering a company's accounting, distribution, manufacturing, purchasing, human resources, and other functions 
B)  a costing system that omits recording some of the journal entries relating to the stages from the purchase of direct materials to the sale of finished goods 
C)  a push-through system in which each component in a production line is produced immediately as needed by the next step in the production line 
D)  a costing system that comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities 
A)  an integrated costing system covering a company's accounting, distribution, manufacturing, purchasing, human resources, and other functions 
B)  a costing system that omits recording some of the journal entries relating to the stages from the purchase of direct materials to the sale of finished goods 
C)  a push-through system in which each component in a production line is produced immediately as needed by the next step in the production line 
D)  a costing system that comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities

Question 10

Increases in the carrying cost and decreases in the ordering cost per purchase order result in ________.

Accepted Answer

A)  smaller EOQ amounts 
B)  larger EOQ amounts 
C)  larger relevant total costs 
D)  smaller relevant total costs 
A)  smaller EOQ amounts 
B)  larger EOQ amounts 
C)  larger relevant total costs 
D)  smaller relevant total costs

Question 11

Ralph was in the process of completing the quarterly planning for the purchasing department when a major computer malfunction lost most of his data. For direct material XXX he was able to recover the following:
   
Ralph purchases at the EOQ quantity level.
Required:
Determine the annual demand, the cost of placing an order, the annual carrying cost of one unit, and the economic order quantity.

Accepted Answer

The answer of Ralph was in the process of completing...

Question 12

Which of the following statements is true of lean accounting?

Accepted Answer

A)  It is much complex than traditional product costing but produces more accurate product unit costs. 
B)  It does not always compute costs for individual products but does emphasize product costs by value stream. 
C)  It omits recording some of the journal entries relating to the stages from the purchase of direct materials to the sale of finished goods. 
D)  It is acceptable under GAAP. 
A)  It is much complex than traditional product costing but produces more accurate product unit costs. 
B)  It does not always compute costs for individual products but does emphasize product costs by value stream. 
C)  It omits recording some of the journal entries relating to the stages from the purchase of direct materials to the sale of finished goods. 
D)  It is acceptable under GAAP.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Lean accounting is much simpler than traditional product costing. Why?

Accepted Answer

Lean accounting is much simple

Question 15

Which of the following statements best defines lean accounting?

Accepted Answer

A)  an accounting system that comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities 
B)  a costing method that supports creating value for the customer by costing the entire value stream thereby eliminating waste in the accounting process 
C)  an accounting system that omits recording some of the journal entries relating to the stages from the purchase of direct materials to the sale of finished goods 
D)  an integrated costing system covering a company's accounting, distribution, manufacturing, purchasing, human resources, and other functions 
A)  an accounting system that comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities 
B)  a costing method that supports creating value for the customer by costing the entire value stream thereby eliminating waste in the accounting process 
C)  an accounting system that omits recording some of the journal entries relating to the stages from the purchase of direct materials to the sale of finished goods 
D)  an integrated costing system covering a company's accounting, distribution, manufacturing, purchasing, human resources, and other functions

Question 16

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 $30.00 per DVD; DVDs are shipped in packages of 66. Globe pays all incoming freight, and DVD Mart does not inspect the DVDs due to Globe's reputation for high quality. Annual demand is 312,000 DVDs at a rate of 6500 DVDs per week. DVD Mart earns 10% on its cash investments. The purchase-order lead time is one week. The following cost data are available:
 
How many deliveries will be made during each time period?

Accepted Answer

A)  63.71 deliveries 
B)  39.89 deliveries 
C)  90.10 deliveries 
D)  62.84 deliveries 
A)  63.71 deliveries 
B)  39.89 deliveries 
C)  90.10 deliveries 
D)  62.84 deliveries

Question 17

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.

Accepted Answer

a.The square root of [(2 × 25,

Question 18

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.)

Accepted Answer

A)  $1560.00 
B)  $514.09 
C)  $2075.03 
D)  $3120.00 
A)  $1560.00 
B)  $514.09 
C)  $2075.03 
D)  $3120.00

Question 19

Which of the following is not a reason why a company would adopt JIT purchasing practices?

Accepted Answer

A)  high shrinkage costs 
B)  low ordering costs 
C)  low carrying costs of inventory 
D)  reliable supply chains 
A)  high shrinkage costs 
B)  low ordering costs 
C)  low carrying costs of inventory 
D)  reliable supply chains

Question 20

If Premium Company has a safety stock of 480 units and the average daily demand is 68 units, how many days can be covered if the shipment from the supplier is delayed by 4 days?

Accepted Answer

A)  7 days 
B)  4 days 
C)  11 days 
D)  3 days 
A)  7 days 
B)  4 days 
C)  11 days 
D)  3 days

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

Beryl Company sells 900 flash drives per week. Purchase-order lead time is 2 weeks and the economic-order quantity is 1625 units. What is the reorder point?

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?

Sharing sales information throughout the supply chain leads to which of the following?

A company's inventory levels are dependent on a number of variables including the demand for the product, supplier relationships, and supplier relationships with their manufacturers.

Which of the following statements is true of the financial and nonfinancial measures in just-in-time production systems?

The costs that result from theft of inventory are ________.

Which of the following statements best defines backflush costing system?

Increases in the carrying cost and decreases in the ordering cost per purchase order result in ________.

Which of the following statements is true of lean accounting?

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

Lean accounting is much simpler than traditional product costing. Why?

Which of the following statements best defines lean accounting?

Which of the following is not a reason why a company would adopt JIT purchasing practices?

If Premium Company has a safety stock of 480 units and the average daily demand is 68 units, how many days can be covered if the shipment from the supplier is delayed by 4 days?

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 is the best definition of inventory management?

Beryl Company sells 900 flash drives per week. Purchase-order lead time is 2 weeks and the economic-order quantity is 1625 units. What is the reorder point?

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?

Sharing sales information throughout the supply chain leads to which of the following?

A company's inventory levels are dependent on a number of variables including the demand for the product, supplier relationships, and supplier relationships with their manufacturers.

Which of the following statements is true of the financial and nonfinancial measures in just-in-time production systems?

The costs that result from theft of inventory are ________.

Which of the following statements best defines backflush costing system?

Increases in the carrying cost and decreases in the ordering cost per purchase order result in ________.

Which of the following statements is true of lean accounting?

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

Lean accounting is much simpler than traditional product costing. Why?

Which of the following statements best defines lean accounting?

Which of the following is not a reason why a company would adopt JIT purchasing practices?

If Premium Company has a safety stock of 480 units and the average daily demand is 68 units, how many days can be covered if the shipment from the supplier is delayed by 4 days?

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