Test Bank Managerial Accounting: Creating Value in a Dynamic Business Envir
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onment, 13th Edition by Ronald Hilton hj hj hj hj hj
Appendix III hj
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. hj hj hj hj hj hj hj
B) equals the costs of ordering and holding inventory.
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C) minimizes the costs of ordering and holding inventory. hj hj hj hj hj hj hj
All Chapters hj
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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hj
2) Inventory decisions involve a delicate balance between which of the following classes of c
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osts?
A) Ordering costs, advertising costs, and shipping costs
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B) Advertising costs, holding costs, and shortage costs hj hj hj hj hj hj
C) Ordering costs, holding costs, and shortage costs
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D) Ordering costs, shipping costs, and shortage costs
hj hj hj hj hj hj
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 hj hj hj hj hj hj
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 to o
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ptimize the order quantity hj hj hj
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 o
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rdering and holding inventory hj hj hj
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 hj hj hj
B) Eliminating inspections hj
C) Reducing the number of vendors hj hj hj hj
D) Making less frequent payments hj hj hj
E) All of the answers are correct
hj hj hj hj hj
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
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
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. hj
8) Which of the following is classified as an inventory shortage cost?
hj hj hj hj hj hj hj hj hj hj
A) Purchase order preparation hj hj
B) Production disruption hj
C) Lost sales and lost customershj hj hj hj
D) Spoilage
E) Both production disruption and lost sales and lost customers
hj hj hj hj hj hj hj hj
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 o
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rder size of 2,200 units. Annual demand is 44,000 units, ordering costs are $60 per order, and
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holding costs are $6 per unit. The company's annual holding costs total:
hj hj hj hj hj hj hj hj hj hj hj
A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) none of the answers is correct. hj hj hj hj hj
11) Langdon Enterprises uses an economic order quantity model and has determined an optimal o
hj hj hj hj hj hj hj hj hj hj hj hj hj
rder size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order, and hol
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ding costs are $4 per unit. The company's annual holding costs total:
hj hj hj hj hj hj hj hj hj hj hj
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) none of the answers is correct. hj hj hj hj hj
12) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
310-
sheet packages at a cost of $310 per package. Management estimates that the cost of placing a
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nd receiving a typical order is $36, and the annual cost of carrying a package in inventory is $
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3.60. Reflection Graphics uses 4,700 packages of paper each year. Production is constant, and
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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.
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A) 307 packages. hj
B) 4,018 packages. hj
C) 2,093 packages. hj
D) 1,636 packages. hj
E) 1,166 packages. hj
3
, 13) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
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100-
sheet packages at a cost of $100 per package. Management estimates that the cost of placing a
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nd receiving a typical order is $15, and the annual cost of carrying a package in inventory is $
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1.50. Reflection Graphics uses 2,600 packages of paper each year. Production is constant, and
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the 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. hj
B) 225 packages. hj
C) 228 packages. hj
D) 565 packages. hj
E) 631 packages. hj
14) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
350-
sheet packages at a cost of $350 per package. Management estimates that the cost of placing a
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nd receiving a typical order is $40, and the annual cost of carrying a package in inventory is $
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4.00. Reflection Graphics uses 5,100 packages of paper each year. Production is constant, and
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the 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. hj
B) 1,440 packages. hj
C) 5,600 packages. hj
D) 350 packages. hj
E) 294 packages. hj
15) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
100-
sheet packages at a cost of $100 per package. Management estimates that the cost of placing a
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nd receiving a typical order is $15, and the annual cost of carrying a package in inventory is $
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1.50. Reflection Graphics uses 2,600 packages of paper each year. Production is constant, and
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the lead time to receive an order is one week.
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The reorder point is:
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A) 25 packages. hj
B) 50 packages. hj
C) 100 packages. hj
D) 203 packages. hj
E) 225 packages. hj
4
hj hj hj hj hj hj hj hj hj hj
onment, 13th Edition by Ronald Hilton hj hj hj hj hj
Appendix III hj
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. hj hj hj hj hj hj hj
B) equals the costs of ordering and holding inventory.
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C) minimizes the costs of ordering and holding inventory. hj hj hj hj hj hj hj
All Chapters hj
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 c
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osts?
A) Ordering costs, advertising costs, and shipping costs
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B) Advertising costs, holding costs, and shortage costs hj hj hj hj hj hj
C) Ordering costs, holding costs, and shortage costs
hj hj hj hj hj hj
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 hj hj hj hj hj hj
E) None of the answers are correct
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4) Which one of the following is true of Economic Order Quantity (EOQ)?
hj hj hj hj hj hj hj hj hj hj hj
A) The EOQ approach takes the view that some inventory is necessary in order to o
hj hj hj hj hj hj hj hj hj hj hj hj hj hj
ptimize the order quantity hj hj hj
B) Is calculates as the square root of the following: (2 × annual requirement × cost per or
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
der) ÷ annual holding cost per unit
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C) The graphical approach is one method of calculating EOQ
hj hj hj hj hj hj hj hj
D) A mathematical tool for determining the order quantity that minimizes the cost of o
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rdering and holding inventory hj hj hj
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?
hj hj hj hj hj hj hj hj hj hj hj
A) Negotiating long-term supply agreements hj hj hj
B) Eliminating inspections hj
C) Reducing the number of vendors hj hj hj hj
D) Making less frequent payments hj hj hj
E) All of the answers are correct
hj hj hj hj hj
6) Inventory holding costs typically include:
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A) clerical costs of purchase-order preparation.
hj hj hj hj
B) costs of deterioration, theft, or spoilage.
hj hj hj hj hj
C) costs associated with lost sales to customers.
hj hj hj hj hj hj
D) forgone interest on money tied up in inventory.
hj hj hj hj hj hj hj
E) both costs of deterioration, theft, or spoilage and forgone interest on money tied up in in
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
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. hj
8) Which of the following is classified as an inventory shortage cost?
hj hj hj hj hj hj hj hj hj hj
A) Purchase order preparation hj hj
B) Production disruption hj
C) Lost sales and lost customershj hj hj hj
D) Spoilage
E) Both production disruption and lost sales and lost customers
hj hj hj hj hj hj hj hj
9) At the economic order quantity:
hj hj hj hj
A) total annual inventory costs, holding costs, and ordering costs are all minimized.
hj hj hj hj hj hj hj hj hj hj hj
B) total annual inventory costs and holding costs are minimized.
hj hj hj hj hj hj hj hj
C) total annual inventory costs are minimized, and holding costs equal ordering costs.
hj hj hj hj hj hj hj hj hj hj hj
D) total annual inventory costs are minimized, and holding costs exceed ordering costs.
hj hj hj hj hj hj hj hj hj hj hj
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 o
hj hj hj hj hj hj hj hj hj hj hj hj hj
rder size of 2,200 units. Annual demand is 44,000 units, ordering costs are $60 per order, and
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
holding costs are $6 per unit. The company's annual holding costs total:
hj hj hj hj hj hj hj hj hj hj hj
A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) none of the answers is correct. hj hj hj hj hj
11) Langdon Enterprises uses an economic order quantity model and has determined an optimal o
hj hj hj hj hj hj hj hj hj hj hj hj hj
rder size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order, and hol
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
ding costs are $4 per unit. The company's annual holding costs total:
hj hj hj hj hj hj hj hj hj hj hj
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) none of the answers is correct. hj hj hj hj hj
12) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
310-
sheet packages at a cost of $310 per package. Management estimates that the cost of placing a
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
nd receiving a typical order is $36, and the annual cost of carrying a package in inventory is $
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
3.60. Reflection Graphics uses 4,700 packages of paper each year. Production is constant, and
hj hj hj hj hj hj hj hj hj hj hj hj hj
the lead time to receive an order is two week.
hj hj hj hj hj hj hj hj hj hj
The economic order quantity is approximately:
hj hj hj hj hj
Note: Round your final answer to the nearest whole number.
hj hj hj hj hj hj hj hj hj
A) 307 packages. hj
B) 4,018 packages. hj
C) 2,093 packages. hj
D) 1,636 packages. hj
E) 1,166 packages. hj
3
, 13) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
100-
sheet packages at a cost of $100 per package. Management estimates that the cost of placing a
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
nd receiving a typical order is $15, and the annual cost of carrying a package in inventory is $
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
1.50. Reflection Graphics uses 2,600 packages of paper each year. Production is constant, and
hj hj hj hj hj hj hj hj hj hj hj hj hj
the lead time to receive an order is one week.
hj hj hj hj hj hj hj hj hj hj
The economic order quantity is approximately:
hj hj hj hj hj
A) 203 packages. hj
B) 225 packages. hj
C) 228 packages. hj
D) 565 packages. hj
E) 631 packages. hj
14) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
350-
sheet packages at a cost of $350 per package. Management estimates that the cost of placing a
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
nd receiving a typical order is $40, and the annual cost of carrying a package in inventory is $
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
4.00. Reflection Graphics uses 5,100 packages of paper each year. Production is constant, and
hj hj hj hj hj hj hj hj hj hj hj hj hj
the lead time to receive an order is three weeks.
hj hj hj hj hj hj hj hj hj hj
Note: Assume 52 weeks in a year. Do not round your intermediate calculations. Round yo
hj hj hj hj hj hj hj hj hj hj hj hj hj hj
ur final answer to nearest whole dollar amount.
hj hj hj hj hj hj hj
The reorder point is:
hj hj hj
A) 147 packages. hj
B) 1,440 packages. hj
C) 5,600 packages. hj
D) 350 packages. hj
E) 294 packages. hj
15) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
100-
sheet packages at a cost of $100 per package. Management estimates that the cost of placing a
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
nd receiving a typical order is $15, and the annual cost of carrying a package in inventory is $
hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj hj
1.50. Reflection Graphics uses 2,600 packages of paper each year. Production is constant, and
hj hj hj hj hj hj hj hj hj hj hj hj hj
the lead time to receive an order is one week.
hj hj hj hj hj hj hj hj hj hj
The reorder point is:
hj hj hj
A) 25 packages. hj
B) 50 packages. hj
C) 100 packages. hj
D) 203 packages. hj
E) 225 packages. hj
4
