Question 1

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

Accepted Answer

A)  manufacturing cells 
B)  emphasis on reducing setup time 
C)  workers who specialize in one function or operation 
D)  TQM 
E)  JIT purchasing 
A)  manufacturing cells 
B)  emphasis on reducing setup time 
C)  workers who specialize in one function or operation 
D)  TQM 
E)  JIT purchasing

Question 2

The lack of buffer inventory in a demand-pull system means production staff has extra time to solve problems.

Accepted Answer

A) True 
 B)False

Question 3

All of the following are potential financial benefits of just-in-time EXCEPT

Accepted Answer

A)  lower investments in inventories. 
B)  higher investments in "efficient" storage space. 
C)  reducing the risk of rework. 
D)  reducing the handling costs of inventories. 
E)  reducing manufacturing lead time. 
A)  lower investments in inventories. 
B)  higher investments in "efficient" storage space. 
C)  reducing the risk of rework. 
D)  reducing the handling costs of inventories. 
E)  reducing manufacturing lead time.

Question 4

The economic-order quantity decision model

Accepted Answer

A)  calculates the amount of inventory that may be purchased with the monetary constraint. 
B)  determines the minimum amount of inventory to purchase. 
C)  determines the maximum amount of inventory to keep on hand. 
D)  determines the optimal amount of inventory to order. 
E)  calculates the numbers of employees needed. 
A)  calculates the amount of inventory that may be purchased with the monetary constraint. 
B)  determines the minimum amount of inventory to purchase. 
C)  determines the maximum amount of inventory to keep on hand. 
D)  determines the optimal amount of inventory to order. 
E)  calculates the numbers of employees needed.

Question 5

Falcon Industries manufactures customized industrial compounds. All processing is initiated when an order is received. For April there were no beginning inventories. Conversion Costs and Direct Materials are the only manufacturing cost accounts. Direct Materials are purchased under a just-in-time system. Backflush costing is used with a finished goods trigger point. Additional information is as follows:
   Required:
Record all journal entries for the monthly activities related to the above transactions if backflush costing is used. There were no materials variances during the period. Determine the amount of under or overallocated conversion costs.

Accepted Answer

To record actual conversion co

Question 6

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.
-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 $0.30 per month. The company has established a 14% annual return on investment. At the EOQ quantity, Sandrington's total relevant inventory costs would be:

Accepted Answer

A)  $2,546 
B)  $3,557 
C)  $735 
D)  $4,310 
E)  $6,467 
A)  $2,546 
B)  $3,557 
C)  $735 
D)  $4,310 
E)  $6,467

Question 7

All inventory costs are available in financial accounting systems.

Accepted Answer

A) True 
 B)False

Question 8

Dutch Oven is a bakery company. All processing is in batches of 6 dozen. For March, there were no beginning inventories. Ending direct materials totalled $1,500. Conversion Costs and Direct Materials are the only baking cost accounts. Direct Materials are purchased under a just-in-time system. The company uses backflush costing with three trigger points at purchase of raw materials, completion of finished goods, and sale of finished goods. Additional information for the month is as follows:
   Required:
Record all journal entries for the monthly activities related to the above transactions if backflush costing is used. The company uses a standard costing system for recording the purchase and use of direct materials and the recording of conversion costs.

Accepted Answer

Direct Materials and In Process Inventor

Question 9

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 be required at the economic order quantity?

Accepted Answer

A)  1.0 delivery 
B)  5.1 deliveries 
C)  8.2 deliveries 
D)  10.0 deliveries 
E)  6.8 deliveries 
A)  1.0 delivery 
B)  5.1 deliveries 
C)  8.2 deliveries 
D)  10.0 deliveries 
E)  6.8 deliveries

Question 10

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.
-What are the relevant total costs at the economic order quantity?

Accepted Answer

A)  $1,000 
B)  $1,500 
C)  $3,000 
D)  $3,500 
E)  $2,050 
A)  $1,000 
B)  $1,500 
C)  $3,000 
D)  $3,500 
E)  $2,050

Question 11

Just-in-time purchasing is the purchase of goods or materials such that delivery immediately precedes demand or use.

Accepted Answer

A) True 
 B)False

Question 12

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:
  
-How many deliveries will be required at the economic-order quantity level?

Accepted Answer

A)  17.7 deliveries 
B)  36.5 deliveries 
C)  41.6 deliveries 
D)  52.3 deliveries 
E)  18.9 deliveries 
A)  17.7 deliveries 
B)  36.5 deliveries 
C)  41.6 deliveries 
D)  52.3 deliveries 
E)  18.9 deliveries

Question 13

Berryton Products' only product has an annual demand of 1,000 units. The cost of placing an order is $20 and the cost of carrying one unit in inventory for one year is $10.
Required:
Determine the economic order quantity.

Accepted Answer

/$10 = 63.

Question 14

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?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 15

Answer the following question(s) using the information below:
Green Grass Incorporated is a distributor of golf balls. Garry's Golf Supplies is a local retail outlet which sells golf balls. Garry's purchases the golf balls from Green Grass Incorporated at $0.75 per ball; the golf balls are shipped in cartons of 72. Green Grass Incorporated pays all incoming freight, and Garry's Golf Supplies does not inspect the balls due to Green Grass' reputation for high quality. Annual demand is 172,800 golf balls at a rate of 3,322 balls per week. Garry's Golf Supplies earns 12% on its cash investments. The purchase-order lead time is one week. The following cost data are available:
  
-Purchasing at the EOQ recommended level, what are the relevant total costs?

Accepted Answer

A)  $1,500.00 
B)  $2,085.67 
C)  $2,225.00 
D)  $3,000.00 
E)  $680.00 
A)  $1,500.00 
B)  $2,085.67 
C)  $2,225.00 
D)  $3,000.00 
E)  $680.00

Question 16

An important component in several of the cost categories which are not typically recorded in accounting systems is

Accepted Answer

A)  labour costs. 
B)  opportunity costs. 
C)  ordering costs. 
D)  quality costs. 
E)  quantity costs. 
A)  labour costs. 
B)  opportunity costs. 
C)  ordering costs. 
D)  quality costs. 
E)  quantity costs.

Question 17

When retailers are uncertain about demand for their products or availability of their products from the suppliers, they often hold a fixed level of safety stock to make sure they will be able to fulfill the customers' needs.

Accepted Answer

A) True 
 B)False

Question 18

If annual carrying costs are excluded when evaluating the performance of managers, the managers may favour purchasing in larger order quantities.

Accepted Answer

A) True 
 B)False

Question 19

The total annual relevant cost equation, TRC, includes all of the following inputs EXCEPT

Accepted Answer

A)  ordering costs per purchase order. 
B)  demand in units. 
C)  reorder point. 
D)  carrying cost per unit. 
E)  EOQ. 
A)  ordering costs per purchase order. 
B)  demand in units. 
C)  reorder point. 
D)  carrying cost per unit. 
E)  EOQ.

Question 20

Costs incurred when preparing and issuing purchase orders are included in which of the following categories?

Accepted Answer

A)  carrying costs 
B)  ordering costs 
C)  purchasing costs 
D)  stockout costs 
E)  stockin costs 
A)  carrying costs 
B)  ordering costs 
C)  purchasing costs 
D)  stockout costs 
E)  stockin costs

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

The lack of buffer inventory in a demand-pull system means production staff has extra time to solve problems.

All of the following are potential financial benefits of just-in-time EXCEPT

The economic-order quantity decision model

All inventory costs are available in financial accounting systems.

Just-in-time purchasing is the purchase of goods or materials such that delivery immediately precedes demand or use.

Berryton Products' only product has an annual demand of 1,000 units. The cost of placing an order is $20 and the cost of carrying one unit in inventory for one year is $10. Required: Determine the economic order quantity.

An important component in several of the cost categories which are not typically recorded in accounting systems is

When retailers are uncertain about demand for their products or availability of their products from the suppliers, they often hold a fixed level of safety stock to make sure they will be able to fulfill the customers' needs.

If annual carrying costs are excluded when evaluating the performance of managers, the managers may favour purchasing in larger order quantities.

The total annual relevant cost equation, TRC, includes all of the following inputs EXCEPT

Costs incurred when preparing and issuing purchase orders are included in which of the following categories?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 20: Inventory Cost Management Strategies

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

The lack of buffer inventory in a demand-pull system means production staff has extra time to solve problems.

All of the following are potential financial benefits of just-in-time EXCEPT

The economic-order quantity decision model

All inventory costs are available in financial accounting systems.

Just-in-time purchasing is the purchase of goods or materials such that delivery immediately precedes demand or use.

Berryton Products' only product has an annual demand of 1,000 units. The cost of placing an order is $20 and the cost of carrying one unit in inventory for one year is $10. Required: Determine the economic order quantity.

An important component in several of the cost categories which are not typically recorded in accounting systems is

When retailers are uncertain about demand for their products or availability of their products from the suppliers, they often hold a fixed level of safety stock to make sure they will be able to fulfill the customers' needs.

If annual carrying costs are excluded when evaluating the performance of managers, the managers may favour purchasing in larger order quantities.

The total annual relevant cost equation, TRC, includes all of the following inputs EXCEPT

Costs incurred when preparing and issuing purchase orders are included in which of the following categories?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters