Question 1

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

Question 2

Answer the following question(s)using the information below:
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,FOB destination.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:
  
-What is the economic order quantity for Garry's golf ball purchases?

Accepted Answer

A) 200 cartons 
B) 288 cartons 
C) 300 cartons 
D) 883 cartons 
E) 218 cartons 
A) 200 cartons 
B) 288 cartons 
C) 300 cartons 
D) 883 cartons 
E) 218 cartons

Question 3

Answer the following question(s)using the information below:
The following information has been gathered for Product A:
  
-What are the annual carrying costs for Product A if the company orders at the EOQ amount?

Accepted Answer

A) $80 
B) $320 
C) $760 
D) $160 
E) $1,520 
A) $80 
B) $320 
C) $760 
D) $160 
E) $1,520

Question 4

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 following journal entries properly records the purchase of direct materials at Walton Industries?

Accepted Answer

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

Question 5

Answer the following question(s)using the information below:
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,FOB destination.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:
  
-If Garry's Golf Supplies makes an order (1/12 of annual demand)once per month,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 6

Party Animals orders 5,200 stuffed giraffes per year,at $6 per tiger,FOB destination.Party Animals earns 3% on its cash investments.The purchase order lead time is 4 weeks.The following data are available:
   
Required:
What is the cost of the prediction error?

Accepted Answer

EOQ =
 @#IMG-DLM& 
E

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Primary components that manufacturers would use to evaluate suppliers under a just-in-time system would include all of the following EXCEPT

Accepted Answer

A) on-time delivery. 
B) production lead time. 
C) purchase price. 
D) quality costs. 
E) long-term partnerships. 
A) on-time delivery. 
B) production lead time. 
C) purchase price. 
D) quality costs. 
E) long-term partnerships.

Question 9

Jambalaya Ltd.sells 120,000 units a year.Its carrying costs are $0.35 per unit and its ordering costs are $127 per order.
Required:
a.Calculate the economic order quantity.
b.The supplier has offered a $0.05 discount per unit (on all units)if the order size is 20,000 units.Should Morrissette increase its order size?

Accepted Answer

a.EOQ = @#IMG-DLM& = 9,331.97 round up to 9,332 un

Question 10

Which of the following statements is TRUE?

Accepted Answer

A) The reorder point is the point at which the amount of inventory on hand equals the amount needed to cover sales during the lead time. 
B) The reorder point is the minimum level of inventory allowed during a particular period. 
C) The safety stock is the amount of stock that must be on hand to cover sales during lead time. 
D) The safety stock is the minimum level of inventory that must remain on hand at all times. 
E) The safety stock is the minimum level of inventory that must remain at the customers. 
A) The reorder point is the point at which the amount of inventory on hand equals the amount needed to cover sales during the lead time. 
B) The reorder point is the minimum level of inventory allowed during a particular period. 
C) The safety stock is the amount of stock that must be on hand to cover sales during lead time. 
D) The safety stock is the minimum level of inventory that must remain on hand at all times. 
E) The safety stock is the minimum level of inventory that must remain at the customers.

Question 11

Acme Industries is currently experiencing problems with its inventory of anvils.Its manager,Willy Coy currently orders the anvils in batches of 10,000.Four orders are placed during the year to meet the estimated sales demand of 40,000 units.Each order costs $20 and each unit costs $2 to carry.Mr.Coy maintains a safety stock of 500 anvils.
Required:
a.What are Acme's total annual costs (TC)of inventory under its current ordering policy?
b.What is the Economic Order Quantity for Acme Industries?
c.What is the average inventory if Acme uses the EOQ calculated in part b)and it still maintains its 500 units of safety stock?
d.What is Acme's annual savings in inventory costs by using the EOQ and maintaining its safety stock?

Accepted Answer

a.TC = ordering + carrying
TC= [4 ∗ $20]

Question 12

The purchase order lead time is

Accepted Answer

A) the difference between the time an order is placed and delivered. 
B) the difference between the products ordered and the products received. 
C) the discrepancies in purchase orders. 
D) the time required to correct errors in the products received. 
E) the discrepancies in inventory sheets. 
A) the difference between the time an order is placed and delivered. 
B) the difference between the products ordered and the products received. 
C) the discrepancies in purchase orders. 
D) the time required to correct errors in the products received. 
E) the discrepancies in inventory sheets.

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

Answer the following question(s)using the information below: The following information has been gathered for Product A: -What are the annual carrying costs for Product A if the company orders at the EOQ amount?

Party Animals orders 5,200 stuffed giraffes per year,at $6 per tiger,FOB destination.Party Animals earns 3% on its cash investments.The purchase order lead time is 4 weeks.The following data are available: Required: What is the cost of the prediction error?

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

Primary components that manufacturers would use to evaluate suppliers under a just-in-time system would include all of the following EXCEPT

Which of the following statements is TRUE?

The purchase order lead time is

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

Analysis of Cost Behaviour

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

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 19: Inventory Cost Management Strategies

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

Answer the following question(s)using the information below: The following information has been gathered for Product A: -What are the annual carrying costs for Product A if the company orders at the EOQ amount?

Party Animals orders 5,200 stuffed giraffes per year,at $6 per tiger,FOB destination.Party Animals earns 3% on its cash investments.The purchase order lead time is 4 weeks.The following data are available: Required: What is the cost of the prediction error?

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

Primary components that manufacturers would use to evaluate suppliers under a just-in-time system would include all of the following EXCEPT

Which of the following statements is TRUE?

The purchase order lead time is

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

Analysis of Cost Behaviour

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

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters