1
,Test Bank Managerial Accounting: Creating Value in a Dynamic Business En
ma ma ma ma ma ma ma ma ma ma
vironment, 13th Edition by Ronald Hilton ma ma ma ma ma
Appendix III ma
1) The EOQ model is a mathematical tool for determining the order quantity that:
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A) maximizes the costs of ordering and holding inventory. ma ma ma ma ma ma ma
B) equals the costs of ordering and holding inventory.
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C) minimizes the costs of ordering and holding inventory.
ma ma ma ma ma ma ma
All Chapters
ma
D) has no effect on the costs of ordering and holding inventor
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y.
E) none of these answers are correct.
Answers Included
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ma
2) Inventory decisions involve a delicate balance between which of the following classes o
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f costs?
ma
A) Ordering costs, advertising costs, and shipping costs
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B) Advertising costs, holding costs, and shortage costs ma ma ma ma ma ma
C) Ordering costs, holding costs, and shortage costs
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D) Ordering costs, shipping costs, and shortage costs
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E) Shipping costs, holding costs, and shortage costs
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3) Which one of the following is true of a just-in-time (JIT) system?
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A) JIT system uses a “pull” approach to controlling manufacturing
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B) Inventory of raw materials and parts are kept as a buffer
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C) Inventory of partially completed parts are kept as a buffer
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D) Finished goods are kept as a buffer ma ma ma ma ma ma
E) None of the answers are correct
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4) Which one of the following is true of Economic Order Quantity (EOQ)?
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A) The EOQ approach takes the view that some inventory is necessary in order t
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o optimize the order quantity
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B) Is calculates as the square root of the following: (2 × annual requirement × cost p
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er order) ÷ annual holding cost per unit
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C) The graphical approach is one method of calculating EOQ
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D) A mathematical tool for determining the order quantity that minimizes the cost
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of ordering and holding inventory
ma ma ma ma
E) All of the answers are correct
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2
,5) Which ma of the following is a way that JIT efficiencies are achieved?
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A) Negotiating long-term supply agreements ma ma ma
B) Eliminating inspections ma
C) Reducing the number of vendors ma ma ma ma
D) Making less frequent paymentsma ma ma
E) All of the answers are correct
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6) Inventory holding costs typically include:
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A) clerical costs of purchase-order preparation.
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B) costs of deterioration, theft, or spoilage.
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C) costs associated with lost sales to customers.
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D) forgone interest on money tied up in inventory.
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E) both costs of deterioration, theft, or spoilage and forgone interest on money tied up i
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n inventory.
ma
7) Inventory holding costs would typically include all of the following except:
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A) insurance.
B) theft.
C) transportation.
D) obsolescence.
E) warehouse rent. ma
8) Which ma of the following is classified as an inventory shortage cost?
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A) Purchase order preparation ma ma
B) Production disruption ma
C) Lost sales and lost customers
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D) Spoilage
E) Both production disruption and lost sales and lost customers
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9) At the
ma economic order quantity:
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A) total annual inventory costs, holding costs, and ordering costs are all minimized.
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B) total annual inventory costs and holding costs are minimized.
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C) total annual inventory costs are minimized, and holding costs equal ordering costs.
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D) total annual inventory costs are minimized, and holding costs exceed ordering costs.
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E) total annual inventory costs are minimized, and ordering costs exceed holding costs.
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3
, 10) Langdon Enterprises uses an economic order quantity model and has determined an optim
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al order size of 2,200 units. Annual demand is 44,000 units, ordering costs are $60 per or
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der, and holding costs are $6 per unit. The company's annual holding costs total:
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A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) none of the answers is correct. ma ma ma ma ma
11) Langdon Enterprises uses an economic order quantity model and has determined an optim
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al order size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order,
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and holding costs are $4 per unit. The company's annual holding costs total:
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A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) none of the answers is correct. ma ma ma ma ma
12) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchase
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d in 310-
ma ma
sheet packages at a cost of $310 per package. Management estimates that the cost of placi
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ng and receiving a typical order is $36, and the annual cost of carrying a package in inven
ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma
tory is $3.60. Reflection Graphics uses 4,700 packages of paper each year. Production is c
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onstant, and the lead time to receive an order is two week.
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The economic order quantity is approximately:
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Note: Round your final answer to the nearest whole number.
ma ma ma ma ma ma ma ma ma
A) 307 packages. ma
B) 4,018 packages. ma
C) 2,093 packages. ma
D) 1,636 packages. ma
E) 1,166 packages. ma
4
,Test Bank Managerial Accounting: Creating Value in a Dynamic Business En
ma ma ma ma ma ma ma ma ma ma
vironment, 13th Edition by Ronald Hilton ma ma ma ma ma
Appendix III ma
1) The EOQ model is a mathematical tool for determining the order quantity that:
ma ma ma ma ma ma ma ma ma ma ma ma
A) maximizes the costs of ordering and holding inventory. ma ma ma ma ma ma ma
B) equals the costs of ordering and holding inventory.
ma ma ma ma ma ma ma
C) minimizes the costs of ordering and holding inventory.
ma ma ma ma ma ma ma
All Chapters
ma
D) has no effect on the costs of ordering and holding inventor
ma ma ma ma ma ma ma ma ma ma
y.
E) none of these answers are correct.
Answers Included
ma ma ma ma ma
ma
2) Inventory decisions involve a delicate balance between which of the following classes o
ma ma ma ma ma ma ma ma ma ma ma ma
f costs?
ma
A) Ordering costs, advertising costs, and shipping costs
ma ma ma ma ma ma
B) Advertising costs, holding costs, and shortage costs ma ma ma ma ma ma
C) Ordering costs, holding costs, and shortage costs
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D) Ordering costs, shipping costs, and shortage costs
ma ma ma ma ma ma
E) Shipping costs, holding costs, and shortage costs
ma ma ma ma ma ma
3) Which one of the following is true of a just-in-time (JIT) system?
ma ma ma ma ma ma ma ma ma ma ma
A) JIT system uses a “pull” approach to controlling manufacturing
ma ma ma ma ma ma ma ma
B) Inventory of raw materials and parts are kept as a buffer
ma ma ma ma ma ma ma ma ma ma
C) Inventory of partially completed parts are kept as a buffer
ma ma ma ma ma ma ma ma ma
D) Finished goods are kept as a buffer ma ma ma ma ma ma
E) None of the answers are correct
ma ma ma ma ma
4) Which one of the following is true of Economic Order Quantity (EOQ)?
ma ma ma ma ma ma ma ma ma ma ma
A) The EOQ approach takes the view that some inventory is necessary in order t
ma ma ma ma ma ma ma ma ma ma ma ma ma
o optimize the order quantity
ma ma ma ma
B) Is calculates as the square root of the following: (2 × annual requirement × cost p
ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma
er order) ÷ annual holding cost per unit
ma ma ma ma ma ma ma
C) The graphical approach is one method of calculating EOQ
ma ma ma ma ma ma ma ma
D) A mathematical tool for determining the order quantity that minimizes the cost
ma ma ma ma ma ma ma ma ma ma ma ma
of ordering and holding inventory
ma ma ma ma
E) All of the answers are correct
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2
,5) Which ma of the following is a way that JIT efficiencies are achieved?
ma ma ma ma ma ma ma ma ma ma
A) Negotiating long-term supply agreements ma ma ma
B) Eliminating inspections ma
C) Reducing the number of vendors ma ma ma ma
D) Making less frequent paymentsma ma ma
E) All of the answers are correct
ma ma ma ma ma
6) Inventory holding costs typically include:
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A) clerical costs of purchase-order preparation.
ma ma ma ma
B) costs of deterioration, theft, or spoilage.
ma ma ma ma ma
C) costs associated with lost sales to customers.
ma ma ma ma ma ma
D) forgone interest on money tied up in inventory.
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E) both costs of deterioration, theft, or spoilage and forgone interest on money tied up i
ma ma ma ma ma ma ma ma ma ma ma ma ma ma
n inventory.
ma
7) Inventory holding costs would typically include all of the following except:
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A) insurance.
B) theft.
C) transportation.
D) obsolescence.
E) warehouse rent. ma
8) Which ma of the following is classified as an inventory shortage cost?
ma ma ma ma ma ma ma ma ma
A) Purchase order preparation ma ma
B) Production disruption ma
C) Lost sales and lost customers
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D) Spoilage
E) Both production disruption and lost sales and lost customers
ma ma ma ma ma ma ma ma
9) At the
ma economic order quantity:
ma ma ma
A) total annual inventory costs, holding costs, and ordering costs are all minimized.
ma ma ma ma ma ma ma ma ma ma ma
B) total annual inventory costs and holding costs are minimized.
ma ma ma ma ma ma ma ma
C) total annual inventory costs are minimized, and holding costs equal ordering costs.
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D) total annual inventory costs are minimized, and holding costs exceed ordering costs.
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E) total annual inventory costs are minimized, and ordering costs exceed holding costs.
ma ma ma ma ma ma ma ma ma ma ma
3
, 10) Langdon Enterprises uses an economic order quantity model and has determined an optim
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al order size of 2,200 units. Annual demand is 44,000 units, ordering costs are $60 per or
ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma
der, and holding costs are $6 per unit. The company's annual holding costs total:
ma ma ma ma ma ma ma ma ma ma ma ma ma
A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) none of the answers is correct. ma ma ma ma ma
11) Langdon Enterprises uses an economic order quantity model and has determined an optim
ma ma ma ma ma ma ma ma ma ma ma ma
al order size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order,
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and holding costs are $4 per unit. The company's annual holding costs total:
a ma ma ma ma ma ma ma ma ma ma ma ma
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) none of the answers is correct. ma ma ma ma ma
12) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchase
ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma
d in 310-
ma ma
sheet packages at a cost of $310 per package. Management estimates that the cost of placi
ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma
ng and receiving a typical order is $36, and the annual cost of carrying a package in inven
ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma ma
tory is $3.60. Reflection Graphics uses 4,700 packages of paper each year. Production is c
ma ma ma ma ma ma ma ma ma ma ma ma ma ma
onstant, and the lead time to receive an order is two week.
ma ma ma ma ma ma ma ma ma ma ma
The economic order quantity is approximately:
ma ma ma ma ma
Note: Round your final answer to the nearest whole number.
ma ma ma ma ma ma ma ma ma
A) 307 packages. ma
B) 4,018 packages. ma
C) 2,093 packages. ma
D) 1,636 packages. ma
E) 1,166 packages. ma
4
