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,Test Bank Managerial Accounting: Creating Value in a Dynamic Business Envir
r r r r r r r r r r
onment, 13th Edition by Ronald Hilton
r r r r r
Appendix III r
1) TherEOQrmodelrisrarmathematicalrtoolrforrdeterminingrtherorderrquantityrthat:
A) maximizesrthercostsrofrorderingrandrholdingrinventory.
B) equalsrthercostsrofrorderingrandrholdingrinventory.
C) minimizesrthercostsrofrorderingrandrholdingrinventory. All Chapters
r
D) hasrnoreffectronrthercostsrofrorderingrandrholdingrinventory.
E) nonerofrtheseranswersrarercorrect.
Answers Included
r
2) Inventoryrdecisionsrinvolverardelicaterbalancerbetweenrwhichrofrtherfollowingrclassesrofrcos
ts?
A) Orderingrcosts,radvertisingrcosts,randrshippingrcosts
B) Advertisingrcosts,rholdingrcosts,randrshortagercosts
C) Orderingrcosts,rholdingrcosts,randrshortagercosts
D) Orderingrcosts,rshippingrcosts,randrshortagercosts
E) Shippingrcosts,rholdingrcosts,randrshortagercosts
3) Whichronerofrtherfollowingrisrtruerofrarjust-in-timer(JIT)rsystem?
A) JITrsystemrusesrar“pull”rapproachrtorcontrollingrmanufacturing
B) Inventoryrofrrawrmaterialsrandrpartsrarerkeptrasrarbuffer
C) Inventoryrofrpartiallyrcompletedrpartsrarerkeptrasrarbuffer
D) Finishedrgoodsrarerkeptrasrarbuffer
E) Nonerofrtheranswersrarercorrect
4) WhichronerofrtherfollowingrisrtruerofrEconomicrOrderrQuantityr(EOQ)?
A) TherEOQrapproachrtakesrtherviewrthatrsomerinventoryrisrnecessaryrinrorderrtoropt
imizertherorderrquantity
B) Isrcalculatesrasrthersquarerrootrofrtherfollowing:r(2r×rannualrrequirementr×rcostrperrord
er)r÷rannualrholdingrcostrperrunit
C) ThergraphicalrapproachrisronermethodrofrcalculatingrEOQ
D) Armathematicalrtoolrforrdeterminingrtherorderrquantityrthatrminimizesrthercostrofrord
eringrandrholdingrinventory
E) Allrofrtheranswersrarercorrect
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,5) WhichrofrtherfollowingrisrarwayrthatrJITrefficienciesrarerachieved?
A) Negotiatingrlong-termrsupplyragreements
B) Eliminatingrinspections
C) Reducingrthernumberrofrvendors
D) Makingrlessrfrequentrpayments
E) Allrofrtheranswersrarercorrect
6) Inventoryrholdingrcostsrtypicallyrinclude:
A) clericalrcostsrofrpurchase-orderrpreparation.
B) costsrofrdeterioration,rtheft,rorrspoilage.
C) costsrassociatedrwithrlostrsalesrtorcustomers.
D) forgonerinterestronrmoneyrtiedruprinrinventory.
E) bothrcostsrofrdeterioration,rtheft,rorrspoilagerandrforgonerinterestronrmoneyrtiedruprinrinv
entory.
7) Inventoryrholdingrcostsrwouldrtypicallyrincluderallrofrtherfollowingrexcept:
A) insurance.
B) theft.
C) transportation.
D) obsolescence.
E) warehouserrent.
8) Whichrofrtherfollowingrisrclassifiedrasranrinventoryrshortagercost?
A) Purchaserorderrpreparation
B) Productionrdisruption
C) Lostrsalesrandrlostrcustomers
D) Spoilage
E) Bothrproductionrdisruptionrandrlostrsalesrandrlostrcustomers
9) Atrthereconomicrorderrquantity:
A) totalrannualrinventoryrcosts,rholdingrcosts,randrorderingrcostsrarerallrminimized.
B) totalrannualrinventoryrcostsrandrholdingrcostsrarerminimized.
C) totalrannualrinventoryrcostsrarerminimized,randrholdingrcostsrequalrorderingrcosts.
D) totalrannualrinventoryrcostsrarerminimized,randrholdingrcostsrexceedrorderingrcosts.
E) totalrannualrinventoryrcostsrarerminimized,randrorderingrcostsrexceedrholdingrcosts.
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, 10) LangdonrEnterprisesrusesranreconomicrorderrquantityrmodelrandrhasrdeterminedranroptimalrord
errsizerofr2,200runits.rAnnualrdemandrisr44,000runits,rorderingrcostsrarer$60rperrorder,randrhold
ingrcostsrarer$6rperrunit.rThercompany'srannualrholdingrcostsrtotal:
A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) nonerofrtheranswersrisrcorrect.
11) LangdonrEnterprisesrusesranreconomicrorderrquantityrmodelrandrhasrdeterminedranroptimalrord
errsizerofr500runits.rAnnualrdemandrisr10,000runits,rorderingrcostsrarer$50rperrorder,randrholdingr
costsrarer$4rperrunit.rThercompany'srannualrholdingrcostsrtotal:
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) nonerofrtheranswersrisrcorrect.
12) ReflectionrGraphicsrusesrarspecialrpurposerpaperronr80%rofritsrjobs.rTherpaperrisrpurchasedrinr3
10-
sheetrpackagesratrarcostrofr$310rperrpackage.rManagementrestimatesrthatrthercostrofrplacingrand
rreceivingrartypicalrorderrisr$36,randrtherannualrcostrofrcarryingrarpackagerinrinventoryrisr$3.60.r
ReflectionrGraphicsrusesr4,700rpackagesrofrpaperreachryear.rProductionrisrconstant,randrtherlea
drtimertorreceiveranrorderrisrtworweek.
Thereconomicrorderrquantityrisrapproximately:
Note:rRoundryourrfinalranswerrtorthernearestrwholernumber.
A) 307rpackages.
B) 4,018rpackages.
C) 2,093rpackages.
D) 1,636rpackages.
E) 1,166rpackages.
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