31) Lean accounting: 31)

A) is much simpler than traditional product costing

B) does not compute costs for individual products

C) Neither of these answers are correct.

D) Both A and B are correct.


32) Taronga Toys sells stuffed wombats. Products Inc. manufactures many different stuffed animals.

Taronga Toys orders 10 400 wombats per year, 200 per week, at $35 per koala. The manufacturer

covers all shipping costs. Taronga Toys earns 10% on its cash investments. The purchase-order lead

time is 3 weeks. Taronga Toys sells 185 wombats per week. The following data are available (based

on management's estimates):

Estimated ordering costs per purchase order $10

Estimated insurance, materials handling, breakage,

and so on, per year $3

Actual ordering costs per order $15

What is the economic order quantity using the estimated amounts?


A) 325 stuffed wombats B) 335 stuffed wombats

C) 273 stuffed wombats D) 119 stuffed wombats


33) If Freemantle Engineering Company has a safety stock of 36 units of a particular item and the

average monthly demand is 270 units, how many days can be covered if the shipment from the

supplier is delayed by 12 days? Assume a 360 day year.


A) 12.0 days B) 6.7 days C) 4.0 days D) 8.0 days


34) Which of the following industries is likely to have the highest cost of goods sold percentage relative

to sales?


A) drug manufacturers

B) retail organisations

C) computer manufacturers

D) The percentage will usually depend on the success of a particular company.


35) The optimal safety stock level is the quantity of safety stock that minimises the sum of the annual



A) stockout costs and carrying costs B) ordering costs and carrying costs

C) ordering costs and purchasing costs D) ordering costs and stockout costs


36) In managing inventory, the costs associated with inventory obsolescence are included in which of

these cost categories?


A) carrying costs B) quality costs C) labour costs D) ordering costs


37) A grouping of all the different types of equipment used to make a given product is referred to as: 37)

A) material requirements planning B) economic order quantity

C) manufacturing cells D) total quality management


38) The implications of JIT and backflush costing systems for activity-based costing systems include: 38)

A) more of the costs are direct B) overhead cost allocations are reduced

C) Neither of these answers are correct. D) Both A and B are correct.


39) In managing inventories, the costs of preparing, issuing, and paying purchase orders, plus

receiving and inspecting the items included in orders are known as:


A) purchasing costs B) stockout costs

C) ordering costs D) carrying costs




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