APICS CPIM - Part 1 Module 5 EXAM 2023 WITH COMPLETE SOLUTIONS

Inventory on the balance sheet at the end of the last year was $5,000,000. Inventory at the end of this year was $4,000,000. Last year's annual cost of goods sold (COGS) was $3,000,000. This year's annual COGS was $2,300,000. What is this year's inventory turnover? 0.511 times EXPLANATION: Inventory Turnover = Annual COGS/Average Inventory in Dollars. Average Inventory = (Inventory at Period Start + Inventory at Period End)/2. Since the inventory at the end of the last year will be the same as the inventory at the beginning of this year, it can be used when calculating average inventory. Average Inventory for this year: ($5,000,000 + $4,000,000)/2 = $4,500,000. Inventory Turnover = $2,300,000/$4,500,000 = 0.511 times. Which is a function of physical distribution? The activities of physical distribution include transportation, distribution inventory, warehousing, material handling, and protective packaging. What is the term for the difference between sales and cost of goods sold for an organization? Gross profit margin Which financial statement shows a company's debt? Balance Sheet Which is a positive benefit that can be realized by implementing a new raw material ordering system that reduces the total lead time of in-transit inventory by a full day? Raw material inventory levels held at the plant for decoupling purposes can be reduced. Which accounting method for valuing inventory estimates total cost, including allocated overhead, to produce a batch of goods divided by the total number of units produced? Average cost Safety stock depends on which of the following? Variability of demand Finished goods being shipped from one facility to another is considered which type of inventory? In-transit On a balance sheet, assets are $1 million. If liabilities are $600,000, what is owners' equity? $400,000 How is inventory turnover calculated? Cost of Goods Sold/Average Inventory Investment What is true in relation to cash flows and work-in-process (WIP) inventory? Labor, materials, and overhead immediately become accounts payable or wages payable. A manufacturer is experiencing a delay in raw materials delivery; the materials will arrive a week later than expected. As a result, the manufacturer must adjust its level of safety stock. The company needs 85 units of safety stock to meet its customer service level. If the original lead time was six weeks, what is the new level of safety stock required? 92 EXPLANATION: The new level of safety stock is equal to the old level of safety stock multiplied by the square root of the new lead time divided by the old lead time—in this case, 85 times the square root of 7/6), or 85 times 1.08 = 92 (rounded). Which organizational objectives are often tradeoffs with one another? Targeted level of customer service and low-cost plant operation When is finished goods safety stock or its equivalent needed least? For a popular line of make-to-order garage doors. Which of the following statements is true when production lead time is increased? Work-in-process inventory will increase. What is the term for the target costs of an operation, process, or product including direct material, direct labor, and overhead charges? Standard costs