11) What is the economic order quantity assuming each order was made at the

economic-order-quantity amount?

11)

A) 1040 units B) 1560 units C) 1248 units D) 500 units

 

Answer the following questions using the information below:

Bondi Surfers Inc. manufactures surf and boogie boards. 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 materials are purchased and when conversion costs are allocated under backflush

costing.

Conversion costs ???? March $1 200 000

Direct materials purchased ???? March $3 210 000

Units produced ???? March 176 400

Units sold ???? March 125 400

12) Which of the following entries properly records the cost of goods sold for the month? 12)

A) Cost of Goods Sold 3 135 000

Work-in-Process 3 135 000

B) Cost of Goods Sold 3 135 000

Finished Goods 3 135 000

C) Finished Goods 3 135 000

Cost of Goods Sold 3 135 000

D) Finished Goods 3 135 000

Work-in-Process 3 135 000

 

13) What are the major relevant costs in maintaining safety stock? 13)

A) carrying costs and purchasing costs B) ordering costs and purchasing costs

C) stockout costs and carrying costs D) ordering costs and stockout costs

 

Answer the following questions using the information below:

The Katoomba Furniture company produces a specialty dining table, and has the following information available concerning

its inventory items:

Relevant ordering costs per purchase order $250

Relevant carrying costs per year:

Required annual return on investment 10%

Required other costs per year $14.00

Annual demand is 1000 tables per year. The purchase price per table is $1600.

14) How many deliveries will be required at the economic order quantity? 14)

A) 5.1 deliveries B) 8.2 deliveries C) 1.0 delivery D) 18.5 deliveries

 

15) Armidale Distributors is a distributor of DVDs. El Cheapo Electronics is a local retail outlet which

sells blank and recorded DVDs. El Cheapo Electronics purchases DVDs from Armidale Distributors

at $0.50 per DVD; DVDs are shipped in packages of 100. Armidale Distributors pays all incoming

freight, and El Cheapo Electronics does not inspect the DVDs due to Armidale Distributors'

reputation for high quality. Annual demand is 104 000 DVDs at a rate of 2000 DVDs per week. El

Cheapo Electronics earns 20% on its cash investments. The purchase-order lead time is two weeks.

The following cost data are available:

Relevant ordering costs per purchase order $45.50

Carrying costs per package per year:

Relevant insurance, materials handling,

breakage, etc., per year $2.50

What is the required dollar annual return on investment per package?

15)

A) $2.50 B) $50.00 C) $10.00 D) $0.50

 

16) The time required to get equipment, tools, and materials ready to start production is called: 16)

A) manufacturing lead time B) pass-through time

C) setup time D) None of these answers are correct.

 

Answer the following questions using the information below:

Appleby Incorporated is a distributor of golf balls. Kel's Golf Supplies is a local retail outlet which sells golf balls. Kel's

purchases the golf balls from Appleby Incorporated at $0.75 per ball; the golf balls are shipped in cartons of 72. Appleby

Incorporated pays all incoming freight, and Kel's Golf Supplies does not inspect the balls due to Appleby' reputation for high

quality. Annual demand is 172 800 golf balls at a rate of 3322 balls per week. Kel's Golf Supplies earns 12% on its cash

investments. The purchase-order lead time is one week. The following cost data are available:

Relevant ordering costs per purchase order $125.00

Carrying costs per carton per year:

Relevant insurance, materials handling,

breakage, etc., per year $0.77

17) What is the economic order quantity? 17)

A) 388 cartons B) 288 cartons C) 300 cartons D) 200 cartons

 

18) Traditional normal and standard costing systems use: 18)

A) backflush costing B) post-deduct costing

C) delayed costing D) sequential tracking

 

19) In managing inventory, the costs that result when a company runs out of a particular item for

which there is a customer demand are known as:

19)

A) shrinkage costs B) EOQ estimation costs

C) shortage costs D) stockout costs

 

20) A demand-pull system in which each component in a production line is produced immediately as

needed by the next step in the production line is referred to as:

20)

A) just-in-time purchasing B) relevant total costs

C) materials requirements planning D) economic order quantity

 

 

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