Test Bank Managerial Accounting: Creating
Value in a Dynamic Business Environment,
13th Edition by Ronald Hilton
Appendix III la
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. la la la la la la la
B) equals the costs of ordering and holding inventory.
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C) minimizes the costs of ordering and holding inventory. la la la la la la la
All Chapters la
D) has no effect on the costs of ordering and holding inventory.
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E) none of these answers are correct.
Answers Included
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2) Inventory decisions involve a delicate balance between which of the following classes of co
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sts?
A) Ordering costs, advertising costs, and shipping costs
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B) Advertising costs, holding costs, and shortage costs la la la la la la
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 la la la la la la
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 la la la la la la la la la la
C) Inventory of partially completed parts are kept as a buffer la la la la la la la la la
D) Finished goods are kept as a buffer la la la la la la
E) None of the answers are correct la la la la la
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 to op
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timize the order quantity la la la
B) Is calculates as the square root of the following: (2 × annual requirement × cost per or
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der) ÷ 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 of or
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dering and holding inventory la la la
E) All of the answers are correct
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1
,5) Which of the following is a way that JIT efficiencies are achieved?
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A) Negotiating long-term supply agreements la la la
B) Eliminating inspections la
C) Reducing the number of vendors la la la la
D) Making less frequent payments la la la
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 in in
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ventory.
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. la
8) Which of the following is classified as an inventory shortage cost?
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A) Purchase order preparation la la
B) Production disruption la
C) Lost sales and lost customersla la la la
D) Spoilage
E) Both production disruption and lost sales and lost customers
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9) At the 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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2
,10) Langdon Enterprises uses an economic order quantity model and has determined an optimal or
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der size of 2,200 units. Annual demand is 44,000 units, ordering costs are $60 per order, and h
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olding 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. la la la la la
11) Langdon Enterprises uses an economic order quantity model and has determined an optimal or
la la la la la la la la la la la la la
der size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order, and holdi
la la la la la la la la la la la la la la la la la
ng costs are $4 per unit. The company's annual holding costs total:
la la la la la la la la la la la
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) none of the answers is correct. la la la la la
12) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
la la la la la la la la la la la la la la la la la
310-
sheet packages at a cost of $310 per package. Management estimates that the cost of placing a
la la la la la la la la la la la la la la la la
nd receiving a typical order is $36, and the annual cost of carrying a package in inventory is $3
la la la la la la la la la la la la la la la la la la
.60. Reflection Graphics uses 4,700 packages of paper each year. Production is constant, and t
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he 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.
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A) 307 packages. la
B) 4,018 packages. la
C) 2,093 packages. la
D) 1,636 packages. la
E) 1,166 packages. la
3
, 13) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
la la la la la la la la la la la la la la la la la
100-
sheet packages at a cost of $100 per package. Management estimates that the cost of placing a
la la la la la la la la la la la la la la la la
nd receiving a typical order is $15, and the annual cost of carrying a package in inventory is $1
la la la la la la la la la la la la la la la la la la
.50. Reflection Graphics uses 2,600 packages of paper each year. Production is constant, and t
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he lead time to receive an order is one week.
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The economic order quantity is approximately:
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A) 203 packages. la
B) 225 packages. la
C) 228 packages. la
D) 565 packages. la
E) 631 packages. la
14) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
la la la la la la la la la la la la la la la la la
350-
sheet packages at a cost of $350 per package. Management estimates that the cost of placing a
la la la la la la la la la la la la la la la la
nd receiving a typical order is $40, and the annual cost of carrying a package in inventory is $4
la la la la la la la la la la la la la la la la la la
.00. Reflection Graphics uses 5,100 packages of paper each year. Production is constant, and t
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he lead time to receive an order is three weeks.
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Note: Assume 52 weeks in a year. Do not round your intermediate calculations. Round yo
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ur final answer to nearest whole dollar amount.
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The reorder point is:
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A) 147 packages. la
B) 1,440 packages. la
C) 5,600 packages. la
D) 350 packages. la
E) 294 packages. la
15) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
la la la la la la la la la la la la la la la la la
100-
sheet packages at a cost of $100 per package. Management estimates that the cost of placing a
la la la la la la la la la la la la la la la la
nd receiving a typical order is $15, and the annual cost of carrying a package in inventory is $1
la la la la la la la la la la la la la la la la la la
.50. Reflection Graphics uses 2,600 packages of paper each year. Production is constant, and t
la la la la la la la la la la la la la la
he lead time to receive an order is one week.
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The reorder point is:
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A) 25 packages. la
B) 50 packages. la
C) 100 packages. la
D) 203 packages. la
E) 225 packages. la
4
Value in a Dynamic Business Environment,
13th Edition by Ronald Hilton
Appendix III la
1) The EOQ model is a mathematical tool for determining the order quantity that:
la la la la la la la la la la la la
A) maximizes the costs of ordering and holding inventory. la la la la la la la
B) equals the costs of ordering and holding inventory.
la la la la la la la
C) minimizes the costs of ordering and holding inventory. la la la la la la la
All Chapters la
D) has no effect on the costs of ordering and holding inventory.
la la la la la la la la la la
E) none of these answers are correct.
Answers Included
la la la la la
la
2) Inventory decisions involve a delicate balance between which of the following classes of co
la la la la la la la la la la la la la
sts?
A) Ordering costs, advertising costs, and shipping costs
la la la la la la
B) Advertising costs, holding costs, and shortage costs la la la la la la
C) Ordering costs, holding costs, and shortage costs
la la la la la la
D) Ordering costs, shipping costs, and shortage costs
la la la la la la
E) Shipping costs, holding costs, and shortage costs la la la la la la
3) Which one of the following is true of a just-in-time (JIT) system?
la la la la la la la la la la la
A) JIT system uses a “pull” approach to controlling manufacturing
la la la la la la la la
B) Inventory of raw materials and parts are kept as a buffer la la la la la la la la la la
C) Inventory of partially completed parts are kept as a buffer la la la la la la la la la
D) Finished goods are kept as a buffer la la la la la la
E) None of the answers are correct la la la la la
4) Which one of the following is true of Economic Order Quantity (EOQ)?
la la la la la la la la la la la
A) The EOQ approach takes the view that some inventory is necessary in order to op
la la la la la la la la la la la la la la
timize the order quantity la la la
B) Is calculates as the square root of the following: (2 × annual requirement × cost per or
la la la la la la la la la la la la la la la la
der) ÷ annual holding cost per unit
la la la la la la
C) The graphical approach is one method of calculating EOQ
la la la la la la la la
D) A mathematical tool for determining the order quantity that minimizes the cost of or
la la la la la la la la la la la la la
dering and holding inventory la la la
E) All of the answers are correct
la la la la la
1
,5) Which of the following is a way that JIT efficiencies are achieved?
la la la la la la la la la la la
A) Negotiating long-term supply agreements la la la
B) Eliminating inspections la
C) Reducing the number of vendors la la la la
D) Making less frequent payments la la la
E) All of the answers are correct
la la la la la
6) Inventory holding costs typically include:
la la la la
A) clerical costs of purchase-order preparation.
la la la la
B) costs of deterioration, theft, or spoilage.
la la la la la
C) costs associated with lost sales to customers.
la la la la la la
D) forgone interest on money tied up in inventory.
la la la la la la la
E) both costs of deterioration, theft, or spoilage and forgone interest on money tied up in in
la la la la la la la la la la la la la la la
ventory.
7) Inventory holding costs would typically include all of the following except:
la la la la la la la la la la
A) insurance.
B) theft.
C) transportation.
D) obsolescence.
E) warehouse rent. la
8) Which of the following is classified as an inventory shortage cost?
la la la la la la la la la la
A) Purchase order preparation la la
B) Production disruption la
C) Lost sales and lost customersla la la la
D) Spoilage
E) Both production disruption and lost sales and lost customers
la la la la la la la la
9) At the economic order quantity:
la la la la
A) total annual inventory costs, holding costs, and ordering costs are all minimized.
la la la la la la la la la la la
B) total annual inventory costs and holding costs are minimized.
la la la la la la la la
C) total annual inventory costs are minimized, and holding costs equal ordering costs.
la la la la la la la la la la la
D) total annual inventory costs are minimized, and holding costs exceed ordering costs.
la la la la la la la la la la la
E) total annual inventory costs are minimized, and ordering costs exceed holding costs.
la la la la la la la la la la la
2
,10) Langdon Enterprises uses an economic order quantity model and has determined an optimal or
la la la la la la la la la la la la la
der size of 2,200 units. Annual demand is 44,000 units, ordering costs are $60 per order, and h
la la la la la la la la la la la la la la la la la
olding costs are $6 per unit. The company's annual holding costs total:
la la la la la la la la la la la
A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) none of the answers is correct. la la la la la
11) Langdon Enterprises uses an economic order quantity model and has determined an optimal or
la la la la la la la la la la la la la
der size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order, and holdi
la la la la la la la la la la la la la la la la la
ng costs are $4 per unit. The company's annual holding costs total:
la la la la la la la la la la la
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) none of the answers is correct. la la la la la
12) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
la la la la la la la la la la la la la la la la la
310-
sheet packages at a cost of $310 per package. Management estimates that the cost of placing a
la la la la la la la la la la la la la la la la
nd receiving a typical order is $36, and the annual cost of carrying a package in inventory is $3
la la la la la la la la la la la la la la la la la la
.60. Reflection Graphics uses 4,700 packages of paper each year. Production is constant, and t
la la la la la la la la la la la la la la
he lead time to receive an order is two week.
la la la la la la la la la
The economic order quantity is approximately:
la la la la la
Note: Round your final answer to the nearest whole number.
la la la la la la la la la
A) 307 packages. la
B) 4,018 packages. la
C) 2,093 packages. la
D) 1,636 packages. la
E) 1,166 packages. la
3
, 13) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
la la la la la la la la la la la la la la la la la
100-
sheet packages at a cost of $100 per package. Management estimates that the cost of placing a
la la la la la la la la la la la la la la la la
nd receiving a typical order is $15, and the annual cost of carrying a package in inventory is $1
la la la la la la la la la la la la la la la la la la
.50. Reflection Graphics uses 2,600 packages of paper each year. Production is constant, and t
la la la la la la la la la la la la la la
he lead time to receive an order is one week.
la la la la la la la la la
The economic order quantity is approximately:
la la la la la
A) 203 packages. la
B) 225 packages. la
C) 228 packages. la
D) 565 packages. la
E) 631 packages. la
14) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
la la la la la la la la la la la la la la la la la
350-
sheet packages at a cost of $350 per package. Management estimates that the cost of placing a
la la la la la la la la la la la la la la la la
nd receiving a typical order is $40, and the annual cost of carrying a package in inventory is $4
la la la la la la la la la la la la la la la la la la
.00. Reflection Graphics uses 5,100 packages of paper each year. Production is constant, and t
la la la la la la la la la la la la la la
he lead time to receive an order is three weeks.
la la la la la la la la la
Note: Assume 52 weeks in a year. Do not round your intermediate calculations. Round yo
la la la la la la la la la la la la la la
ur final answer to nearest whole dollar amount.
la la la la la la la
The reorder point is:
la la la
A) 147 packages. la
B) 1,440 packages. la
C) 5,600 packages. la
D) 350 packages. la
E) 294 packages. la
15) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
la la la la la la la la la la la la la la la la la
100-
sheet packages at a cost of $100 per package. Management estimates that the cost of placing a
la la la la la la la la la la la la la la la la
nd receiving a typical order is $15, and the annual cost of carrying a package in inventory is $1
la la la la la la la la la la la la la la la la la la
.50. Reflection Graphics uses 2,600 packages of paper each year. Production is constant, and t
la la la la la la la la la la la la la la
he lead time to receive an order is one week.
la la la la la la la la la
The reorder point is:
la la la
A) 25 packages. la
B) 50 packages. la
C) 100 packages. la
D) 203 packages. la
E) 225 packages. la
4
