Exam 19: Inventory Cost Management Strategies

Use the information below to answer the following question(s).Office Supply House purchases 4,160 reams of paper per year, ordered in lots of 80 reams per week at $150 per ream.The vendor covers all shipping costs.Office Supply House is not required to inspect the shipment upon entry.Office Supply House earns 20% on its cash investments.The purchase order lead time is two weeks.The following cost data are available: -What are the total relevant inventory costs at the economic order quantity?

Answer the following question(s)using the information below: The Wood Furniture Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: Annual demand is 10,000 packages per year.The purchase price per package is $16. -How many deliveries will Wood Furniture Company require at the economic order quantity?

Answer the following question(s)using the information below: The following information has been gathered for Product A: -The inventory that is held to offset unexpected increases in demand or lead time and unexpected unavailability of stock from suppliers is primarily known as

A jeweller orders gems in lot sizes of 1,250 gems.The annual demand for emeralds is 6,250 gems.Ordering costs are $200 per order and carrying costs are $10 per unit annually.Required: a.Determine the economic order quantity. b.Determine the amount of annual cost savings if the company changes from an order size of 1,250 units to the economic order size. c.One supplier offers a discount of $2 per unit off the purchase price of orders in lots of 625 units or more.What impact would this have on the EOQ and should the order size be changed?

Traditional budgeted and standard costing systems use

Lean accounting is a costing method that supports creating value for customers by costing the value streams, as distinguished from individual products or departments,thereby eliminating waste in the accounting process.

Use the information below to answer the following question(s).Roller Sports Ltd.manufactures various skateboards.For March there were no beginning inventories of direct materials, and no beginning or ending work-in-process.Only one indirect manufacturing cost category is currently in use, "Conversion Costs." Journal entries are recorded when materials are purchased and when conversion costs are allocated under backflush costing.Following is financial information for March. -Which of the following journal entries properly records the purchase of direct materials at Roller Sports Ltd.?

Use the information below to answer the following question(s).Fun 'N' Games manufactures various board games.For January there were no beginning inventories of direct materials, and no beginning or ending work-in-process.Only one indirect manufacturing cost category is currently in use, "Conversion Costs." 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 at Fun 'N' Games?

Dolls "R" Us manufactures children's plastic dolls.For January there were no beginning inventories of direct materials, and no beginning or ending work-in-process.Conversion costs and direct materials are the only manufacturing cost accounts.Journal entries are recorded at three trigger points using backflush costing: purchase of direct materials, completion of finished goods, and sale of product.Since February is the first month of the fiscal year, all actual costs are as budgeted.Additional information for the month is as follows: Required: Record all journal entries for the monthly activities related to the above transactions based on backflush costing.

Morrissette Ltd.sells 240,000 units a year.Its carrying costs are $0.10 per unit and its ordering costs are $187.50 per order.Required: a.Calculate the economic order quantity. b.The supplier has offered a $0.02 discount per unit (on all units)if the order size is 80,000 units.Should Morrissette increase its order size?

Companies can achieve significant gains by sharing information and coordinating activities throughout the supply chain.

An Enterprise Resource Planning (ERP)System comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities.

Costs associated with holding inventories and the resulting opportunity cost of the investment tied up in inventory fall into which of the following categories?

Answer the following question(s)using the information below: The following information has been gathered for Product A: -What is the reorder point for Product A?

Which of the following would NOT be typical when a JIT production system is used?

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

Use the information below to answer the following question(s).Office Supply House purchases 4,160 reams of paper per year, ordered in lots of 80 reams per week at $150 per ream.The vendor covers all shipping costs.Office Supply House is not required to inspect the shipment upon entry.Office Supply House earns 20% on its cash investments.The purchase order lead time is two weeks.The following cost data are available: -What is the economic order quantity?

Answer the following question(s)using the information below: The following information has been gathered for Product A: -Which of the following statements is TRUE?

Answer the following question(s)using the information below: Sandrington Ltd.operates a retail bicycle shop.Wheel covers are popular with customers.Sandrington purchases these covers for $48 per pair, and expects to sell 5,000 pairs per year.Ordering costs are estimated at $180 per order and relevant insurance handling etc.costs are estimated at $3.60 per month.The company has established a 14% annual return on investment. -At the EOQ quantity, Sandrington's total annual relevant inventory costs would be:

The term, supply-chain, describes the flow of goods, services and information from cradle to grave, regardless of whether those activities occur in the same organization or in other organizations.