Exam 19: Inventory Cost Management Strategies

Answer the following question(s)using the information below: Complete Microfilm Products manufactures microfilm cameras.For October 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 units are sold using backflush costing. -A trigger point is defined as

Answer the following questions using the information below: The following information applies to Labs Plus, which supplies microscopes to laboratories throughout the country.Labs Plus purchases the microscopes from a manufacturer which has a reputation for very high quality in its manufacturing operation. -What is the economic order quantity at Labs Plus?

Answer the following question(s)using the information below.Walton Industries uses backflush costing.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 actual costs are incurred, at completion of finished goods, and at sale of finished goods, under backflush costing. -Which of the journal entries properly records conversion costs at Walton Industries?

Answer the following question(s)using the information below: The following information has been gathered for Product A: -What are the major relevant costs in maintaining safety stock?

Answer the following question(s)using the information below: Complete Microfilm Products manufactures microfilm cameras.For October 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 units are sold using backflush costing. -Which of the following entries would occur at Complete Microfilm Products if the only trigger point is the production of finished units?

Just-in-time purchasing requires organizations to place smaller purchase orders with their suppliers.

In the EOQ formula the square root increases the sensitivity of the decision to errors in predicting its inputs.

Echo Sound Ltd.makes musical instruments.One of their products is a banjo that has an annual demand of 3,000 units.The setup cost for each production batch is $900; it costs $15 to carry a banjo in inventory for one year.Required: 1.What is the total annual relevant batch set up and carrying cost if the company uses the economic order quantity? Assume that setup costs are the same as ordering costs.2.The company is switching to a just-in-time system.The average order size is 200 banjos.What is the total annual relevant batch set up and caring cost? 3.Compare the Enterprise Resource Planning EOQ model with the JIT model.What are the advantages and disadvantages of each?

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 entries properly records the cost of goods sold for the month?

Which of the following is NOT a component in a materials requirement planning system?

When there is an inconsistency between the decision model and the model used to evaluate the performance of the person implementing the model, ________ arise.

Which of the following methods is used when production is driven by downstream workstations?

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 percent 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.

Answer the following questions using the information below: Acme Inc.manufactures air compressors.For July 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 units are transferred to finished goods inventory.Acme Inc.uses backflush costing.Variances are written off against Cost of Goods Sold when units are transferred to finished goods inventory.The following data pertains to July: -Which of the following journal entries properly records Acme's direct material costs placed into production for the month of July?

Purchasing costs generally include the freight and transportation costs on goods acquired from suppliers.

The annual demand for red, medium polo shirts, for Clothes, Inc.is 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.Assuming the maximum lead time is 20 days and the maximum daily demand is 125 units, determine the safety stock required to prevent stockouts.

Purchasing costs consist of the costs of preparing and issuing a purchase order.

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 entries properly records the cost of goods sold for the month?

Answer the following question(s)using the information below: Complete Microfilm Products manufactures microfilm cameras.For October 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 units are sold using backflush costing. -Criticism of backflush accounting included all of the following EXCEPT

For supply item ABC, Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly.A new purchasing agent has been hired by the company who wants to start using the economic order quantity method and its supporting decision elements.She has gathered the following information: Required: Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying costs.