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