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/e
ntory.
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/e
rtsize/oft2,200tunits./Annual/demand/is/44,000tunits,/ordering/costs/are/$60tpertorder,/andthold/in
gtcosts/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/e
r/size/of/500/units./Annual/demand/ist10,000/units,/ordering/coststare$50/per/order,/and/holding/cos
ts/are/$4/pertunit./The/company's/annual/holding/costs/total:
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) nonetof/thetanswers/istcorrect.
12) Reflection/Graphics/usesta/special/purposetpaper/ont80%/of/its/jobs./The/paper/is/purchasedtint3/1
0-
sheet/packages/at/a/cost/oft$310/pertpackage./Managementtestimates/thattthe/cost/of/placing/and/re
ceivingtattypical/order/is/$36,/andtthe/annual/costtof/carryingta/packagetin/inventoryis/$3.60./Ref
lection/Graphics/usest4,700/packages/of/paper/eachtyear./Production/is/constant,/and/the/lea/d/tim
etto/receivetan/order/is/two/week.
The/economic/ordertquantity/is/approximately:
Note:/Round/your/final/answer/to/the/nearest/whole/number.
A) 307/packages.
B) 4,018/packages.
C) 2,093/packages.
D) 1,636/packages.
E) 1,166/packages.
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/e
ntory.
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/e
rtsize/oft2,200tunits./Annual/demand/is/44,000tunits,/ordering/costs/are/$60tpertorder,/andthold/in
gtcosts/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/e
r/size/of/500/units./Annual/demand/ist10,000/units,/ordering/coststare$50/per/order,/and/holding/cos
ts/are/$4/pertunit./The/company's/annual/holding/costs/total:
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) nonetof/thetanswers/istcorrect.
12) Reflection/Graphics/usesta/special/purposetpaper/ont80%/of/its/jobs./The/paper/is/purchasedtint3/1
0-
sheet/packages/at/a/cost/oft$310/pertpackage./Managementtestimates/thattthe/cost/of/placing/and/re
ceivingtattypical/order/is/$36,/andtthe/annual/costtof/carryingta/packagetin/inventoryis/$3.60./Ref
lection/Graphics/usest4,700/packages/of/paper/eachtyear./Production/is/constant,/and/the/lea/d/tim
etto/receivetan/order/is/two/week.
The/economic/ordertquantity/is/approximately:
Note:/Round/your/final/answer/to/the/nearest/whole/number.
A) 307/packages.
B) 4,018/packages.
C) 2,093/packages.
D) 1,636/packages.
E) 1,166/packages.
4
