1
, Test Bank Managerial Accounting: Creating Value in a
Dynamic Business Environment, 13th Edition by Ronald
Hilton
Appendix III
1) The EOQ model istamathematical tool for determining thetorder quantitythat:
A) maximizes the costs of ordering and holdingtinventory.
B) equals thetcosts of orderingtand holding inventory.
C) minimizes thetcosts of ordering and holdingtinventory. All Chapters
D) has no effect ontthe costs of ordering andtholdingtinventory.
nonetof thesetanswers arecorrect.
E) Answers Included
2) Inventorydecisions involve atdelicate balance between whichtof thetfollowingtclasses of cos
ts?
A) Orderingtcosts, advertising costs, and shippingtcosts
B) Advertising costs, holding costs, and shortage costs
C) Orderingtcosts, holdingtcosts, and shortage costs
D) Orderingtcosts, shipping costs, and shortage costs
E) Shipping costs, holdingtcosts, and shortage costs
3) Whichtone of the following is true of a just-in-timet(JIT) system?
A) JIT system usestat“pull” approach to controlling manufacturing
B) Inventoryof raw materialstandtpartstare kept as a buffer
C) Inventoryof partially completed parts are kept as a buffer
D) Finishedtgoods are kepttas a buffer
E) None of the answers are correct
4) Whichtonetof the followingtis truetof Economic Order Quantity(EOQ)?
A) The EOQ approachttakes the view thattsomeinventorytis necessaryin orderttoopt
imize thetorder quantity
B) Is calculates as thetsquareroot oftthe following: (2 × annual requirement × costtpertord
er)t÷ annual holdingtcosttpertunit
C) The graphical approach is one method of calculatingtEOQ
D) A mathematical tool fordeterminingtthetorder quantitythat minimizes thetcost of ord
ering and holdingtinventory
E) Alltof thetanswers are correct
2
,5) Whichtof the followingtis a waythat JIT efficiencies are achieved?
A) Negotiating long-term supplytagreements
B) Eliminating inspections
C) Reducing thetnumber of vendors
D) Makingtless frequent payments
E) All of thetanswers are correct
6) Inventoryholding costs typically include:
A) clerical costs of purchase-order preparation.
B) costs of deterioration, theft, ortspoilage.
C) costs associated with lost sales to customers.
D) forgonetinterestton moneyttied up in inventory.
E) bothtcosts of deterioration, theft, ortspoilage and forgone interestton moneytied uptin inv
entory.
7) Inventoryholding costs wouldttypicallyinclude alltof thetfollowing except:
A) insurance.
B) theft.
C) transportation.
D) obsolescence.
E) warehousetrent.
8) Whichtof the followingtis classified astantinventory shortage cost?
A) Purchasetordertpreparation
B) Production disruption
C) Losttsalestandtlosttcustomers
D) Spoilage
E) Bothtproduction disruptiontandtlosttsales andtlosttcustomers
9) At the economic order quantity:
A) total annual inventorycosts, holding costs, and orderingtcosts aretall minimized.
B) total annual inventorytcosts andtholdingtcosts aretminimized.
C) total annual inventorycosts aretminimized, and holding costs equal ordering costs.
D) total annual inventorytcosts are minimized, andtholding costs exceed orderingtcosts.
E) total annual inventorycoststaretminimized, and ordering costs exceed holdingtcosts.
3
, 10) Langdon Enterprises uses anteconomic order quantitymodel and has determined antoptimal ord
ertsize oft2,200tunits. Annual demand is 44,000tunits, ordering costs are $60tpertorder, andthold
ingtcosts are $6 per unit. The company's annual holdingtcosts total:
A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) nonetof thetanswers istcorrect.
11) Langdon Enterprisestuses an economic order quantity model and has determined antoptimal ord
er size of 500 units. Annual demand ist10,000 units, ordering coststare$50 per order, and holding
costs are $4 pertunit. The company's annual holding costs total:
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) nonetofs2thetanswerss2istcorrect.
12) Reflections2Graphicss2usestas2specials2purposetpapers2ont80%s2ofs2itss2jobs.s2Thes2papers2iss2purch
asedtint3s210-
sheets2packagess2ats2as2costs2oft$310s2pertpackage.s2Managementtestimatess2thattthes2costs2ofs2plac
ings2ands2receivingtattypicals2orders2iss2$36,s2andtthes2annuals2costtofs2carryingtas2packagetins2inv
entoryiss2$3.60.s2Reflections2Graphicss2usest4,700s2packagess2ofs2papers2eachtyear.s2Productions2i
ss2constant,s2ands2thes2leas2ds2timettos2receivetans2orders2iss2twos2week.
Thes2economics2ordertquantitys2iss2approximately:
Note:s2Rounds2yours2finals2answers2tos2thes2nearests2wholes2number.
A) 307s2packages.
B) 4,018s2packages.
C) 2,093s2packages.
D) 1,636s2packages.
E) 1,166s2packages.
4
, Test Bank Managerial Accounting: Creating Value in a
Dynamic Business Environment, 13th Edition by Ronald
Hilton
Appendix III
1) The EOQ model istamathematical tool for determining thetorder quantitythat:
A) maximizes the costs of ordering and holdingtinventory.
B) equals thetcosts of orderingtand holding inventory.
C) minimizes thetcosts of ordering and holdingtinventory. All Chapters
D) has no effect ontthe costs of ordering andtholdingtinventory.
nonetof thesetanswers arecorrect.
E) Answers Included
2) Inventorydecisions involve atdelicate balance between whichtof thetfollowingtclasses of cos
ts?
A) Orderingtcosts, advertising costs, and shippingtcosts
B) Advertising costs, holding costs, and shortage costs
C) Orderingtcosts, holdingtcosts, and shortage costs
D) Orderingtcosts, shipping costs, and shortage costs
E) Shipping costs, holdingtcosts, and shortage costs
3) Whichtone of the following is true of a just-in-timet(JIT) system?
A) JIT system usestat“pull” approach to controlling manufacturing
B) Inventoryof raw materialstandtpartstare kept as a buffer
C) Inventoryof partially completed parts are kept as a buffer
D) Finishedtgoods are kepttas a buffer
E) None of the answers are correct
4) Whichtonetof the followingtis truetof Economic Order Quantity(EOQ)?
A) The EOQ approachttakes the view thattsomeinventorytis necessaryin orderttoopt
imize thetorder quantity
B) Is calculates as thetsquareroot oftthe following: (2 × annual requirement × costtpertord
er)t÷ annual holdingtcosttpertunit
C) The graphical approach is one method of calculatingtEOQ
D) A mathematical tool fordeterminingtthetorder quantitythat minimizes thetcost of ord
ering and holdingtinventory
E) Alltof thetanswers are correct
2
,5) Whichtof the followingtis a waythat JIT efficiencies are achieved?
A) Negotiating long-term supplytagreements
B) Eliminating inspections
C) Reducing thetnumber of vendors
D) Makingtless frequent payments
E) All of thetanswers are correct
6) Inventoryholding costs typically include:
A) clerical costs of purchase-order preparation.
B) costs of deterioration, theft, ortspoilage.
C) costs associated with lost sales to customers.
D) forgonetinterestton moneyttied up in inventory.
E) bothtcosts of deterioration, theft, ortspoilage and forgone interestton moneytied uptin inv
entory.
7) Inventoryholding costs wouldttypicallyinclude alltof thetfollowing except:
A) insurance.
B) theft.
C) transportation.
D) obsolescence.
E) warehousetrent.
8) Whichtof the followingtis classified astantinventory shortage cost?
A) Purchasetordertpreparation
B) Production disruption
C) Losttsalestandtlosttcustomers
D) Spoilage
E) Bothtproduction disruptiontandtlosttsales andtlosttcustomers
9) At the economic order quantity:
A) total annual inventorycosts, holding costs, and orderingtcosts aretall minimized.
B) total annual inventorytcosts andtholdingtcosts aretminimized.
C) total annual inventorycosts aretminimized, and holding costs equal ordering costs.
D) total annual inventorytcosts are minimized, andtholding costs exceed orderingtcosts.
E) total annual inventorycoststaretminimized, and ordering costs exceed holdingtcosts.
3
, 10) Langdon Enterprises uses anteconomic order quantitymodel and has determined antoptimal ord
ertsize oft2,200tunits. Annual demand is 44,000tunits, ordering costs are $60tpertorder, andthold
ingtcosts are $6 per unit. The company's annual holdingtcosts total:
A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) nonetof thetanswers istcorrect.
11) Langdon Enterprisestuses an economic order quantity model and has determined antoptimal ord
er size of 500 units. Annual demand ist10,000 units, ordering coststare$50 per order, and holding
costs are $4 pertunit. The company's annual holding costs total:
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) nonetofs2thetanswerss2istcorrect.
12) Reflections2Graphicss2usestas2specials2purposetpapers2ont80%s2ofs2itss2jobs.s2Thes2papers2iss2purch
asedtint3s210-
sheets2packagess2ats2as2costs2oft$310s2pertpackage.s2Managementtestimatess2thattthes2costs2ofs2plac
ings2ands2receivingtattypicals2orders2iss2$36,s2andtthes2annuals2costtofs2carryingtas2packagetins2inv
entoryiss2$3.60.s2Reflections2Graphicss2usest4,700s2packagess2ofs2papers2eachtyear.s2Productions2i
ss2constant,s2ands2thes2leas2ds2timettos2receivetans2orders2iss2twos2week.
Thes2economics2ordertquantitys2iss2approximately:
Note:s2Rounds2yours2finals2answers2tos2thes2nearests2wholes2number.
A) 307s2packages.
B) 4,018s2packages.
C) 2,093s2packages.
D) 1,636s2packages.
E) 1,166s2packages.
4
