Test Bank Managerial Accounting: Creating Value in a Dynamic Business
Environment, 13th Edition by Ronald Hilton
Appendix III L
1) TheLEOQLmodelLisLaLmathematicalLtoolLforLdeterminingLtheLorderLquantityLthat:
A) maximizesLtheLcostsLofLorderingLandLholdingLinventory.
B) equalsLtheLcostsLofLorderingLandLholdingLinventory.
C) minimizesLtheLcostsLofLorderingLandLholdingLinventory. All Chapters
L
D) hasLnoLeffectLonLtheLcostsLofLorderingLandLholdingLinventory.
E) noneLofLtheseLanswersLareLcorrect.
Answers Included
L
2) InventoryLdecisionsLinvolveLaLdelicateLbalanceLbetweenLwhichLofLtheLfollowingLclassesLof
Lcosts?
A) OrderingLcosts,LadvertisingLcosts,LandLshippingLcosts
B) AdvertisingLcosts,LholdingLcosts,LandLshortageLcosts
C) OrderingLcosts,LholdingLcosts,LandLshortageLcosts
D) OrderingLcosts,LshippingLcosts,LandLshortageLcosts
E) ShippingLcosts,LholdingLcosts,LandLshortageLcosts
3) WhichLoneLofLtheLfollowingLisLtrueLofLaLjust-in-timeL(JIT)Lsystem?
A) JITLsystemLusesLaL“pull”LapproachLtoLcontrollingLmanufacturing
B) InventoryLofLrawLmaterialsLandLpartsLareLkeptLasLaLbuffer
C) InventoryLofLpartiallyLcompletedLpartsLareLkeptLasLaLbuffer
D) FinishedLgoodsLareLkeptLasLaLbuffer
E) NoneLofLtheLanswersLareLcorrect
4) WhichLoneLofLtheLfollowingLisLtrueLofLEconomicLOrderLQuantityL(EOQ)?
A) TheLEOQLapproachLtakesLtheLviewLthatLsomeLinventoryLisLnecessaryLinLorderLto
LoptimizeLtheLorderLquantity
B) IsLcalculatesLasLtheLsquareLrootLofLtheLfollowing:L(2L×LannualLrequirementL×LcostLperL
order)L÷LannualLholdingLcostLperLunit
C) TheLgraphicalLapproachLisLoneLmethodLofLcalculatingLEOQ
D) ALmathematicalLtoolLforLdeterminingLtheLorderLquantityLthatLminimizesLtheLcostLof
LorderingLandLholdingLinventory
E) AllLofLtheLanswersLareLcorrect
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,5) WhichLofLtheLfollowingLisLaLwayLthatLJITLefficienciesLareLachieved?
A) NegotiatingLlong-termLsupplyLagreements
B) EliminatingLinspections
C) ReducingLtheLnumberLofLvendors
D) MakingLlessLfrequentLpayments
E) AllLofLtheLanswersLareLcorrect
6) InventoryLholdingLcostsLtypicallyLinclude:
A) clericalLcostsLofLpurchase-orderLpreparation.
B) costsLofLdeterioration,Ltheft,LorLspoilage.
C) costsLassociatedLwithLlostLsalesLtoLcustomers.
D) forgoneLinterestLonLmoneyLtiedLupLinLinventory.
E) bothLcostsLofLdeterioration,Ltheft,LorLspoilageLandLforgoneLinterestLonLmoneyLtiedLupLin
inventory.
L
7) InventoryLholdingLcostsLwouldLtypicallyLincludeLallLofLtheLfollowingLexcept:
A) insurance.
B) theft.
C) transportation.
D) obsolescence.
E) warehouseLrent.
8) WhichLofLtheLfollowingLisLclassifiedLasLanLinventoryLshortageLcost?
A) PurchaseLorderLpreparation
B) ProductionLdisruption
C) LostLsalesLandLlostLcustomers
D) Spoilage
E) BothLproductionLdisruptionLandLlostLsalesLandLlostLcustomers
9) AtLtheLeconomicLorderLquantity:
A) totalLannualLinventoryLcosts,LholdingLcosts,LandLorderingLcostsLareLallLminimized.
B) totalLannualLinventoryLcostsLandLholdingLcostsLareLminimized.
C) totalLannualLinventoryLcostsLareLminimized,LandLholdingLcostsLequalLorderingLcosts.
D) totalLannualLinventoryLcostsLareLminimized,LandLholdingLcostsLexceedLorderingLcosts.
E) totalLannualLinventoryLcostsLareLminimized,LandLorderingLcostsLexceedLholdingLcosts.
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,10) LangdonLEnterprisesLusesLanLeconomicLorderLquantityLmodelLandLhasLdeterminedLanLoptimal
LorderLsizeLofL2,200Lunits.LAnnualLdemandLisL44,000Lunits,LorderingLcostsLareL$60LperLorder,L
andLholdingLcostsLareL$6LperLunit.LTheLcompany'sLannualLholdingLcostsLtotal:
A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) noneLofLtheLanswersLisLcorrect.
11) LangdonLEnterprisesLusesLanLeconomicLorderLquantityLmodelLandLhasLdeterminedLanLoptimalL
orderLsizeLofL500Lunits.LAnnualLdemandLisL10,000Lunits,LorderingLcostsLareL$50LperLorder,Land
LholdingLcostsLareL$4LperLunit.LTheLcompany's LannualLholdingLcostsLtotal:
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) noneLofLtheLanswersLisLcorrect.
12) ReflectionLGraphicsLusesLaLspecialLpurposeLpaperLonL80%LofLitsLjobs.LTheLpaperLisLpurchased
LinL310-
sheetLpackagesLatLaLcostLofL$310LperLpackage.LManagementLestimatesLthatLtheLcostLofLplacin
gLandLreceivingLaLtypicalLorderLisL$36,LandLtheLannualLcostLofLcarryingLaLpackageLinLinventor
yLisL$3.60.LReflectionLGraphicsLusesL4,700LpackagesLofLpaperLeachLyear.LProductionLisLconst
ant,LandLtheLleadLtimeLtoLreceiveLanLorderLisLtwoLweek.
TheLeconomicLorderLquantityLisLapproximately:
Note:LRoundLyourLfinalLanswerLtoLtheLnearestLwholeLnumber.
A) 307Lpackages.
B) 4,018Lpackages.
C) 2,093Lpackages.
D) 1,636Lpackages.
E) 1,166Lpackages.
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, 13) ReflectionLGraphicsLusesLaLspecialLpurposeLpaperLonL80%LofLitsLjobs.LTheLpaperLisLpurchased
LinL100-
sheetLpackagesLatLaLcostLofL$100LperLpackage.LManagementLestimatesLthatLtheLcostLofLplacin
gLandLreceivingLaLtypicalLorderLisL$15,LandLtheLannualLcostLofLcarryingLaLpackageLinLinventor
yLisL$1.50.LReflectionLGraphicsLusesL2,600LpackagesLofLpaperLeachLyear.LProductionLisLconst
ant,LandLtheLleadLtimeLtoLreceiveLanLorderLisLoneLweek.
TheLeconomicLorderLquantityLisLapproximately:
A) 203Lpackages.
B) 225Lpackages.
C) 228Lpackages.
D) 565Lpackages.
E) 631Lpackages.
14) ReflectionLGraphicsLusesLaLspecialLpurposeLpaperLonL80%LofLitsLjobs.LTheLpaperLisLpurchased
LinL350-
sheetLpackagesLatLaLcostLofL$350LperLpackage.LManagementLestimatesLthatLtheLcostLofLplacin
gLandLreceivingLaLtypicalLorderLisL$40,LandLtheLannualLcostLofLcarryingLaLpackageLinLinventor
yLisL$4.00.LReflectionLGraphicsLusesL5,100LpackagesLofLpaperLeachLyear.LProductionLisLconst
ant,LandLtheLleadLtimeLtoLreceiveLanLorderLisLthreeLweeks.
Note:LAssumeL52LweeksLinLaLyear.LDoLnotLroundLyourLintermediateLcalculations.LRoundL
yourLfinalLanswerLtoLnearestLwholeLdollarLamount.
TheLreorderLpointLis:
A) 147Lpackages.
B) 1,440Lpackages.
C) 5,600Lpackages.
D) 350Lpackages.
E) 294Lpackages.
15) ReflectionLGraphicsLusesLaLspecialLpurposeLpaperLonL80%LofLitsLjobs.LTheLpaperLisLpurchased
LinL100-
sheetLpackagesLatLaLcostLofL$100LperLpackage.LManagementLestimatesLthatLtheLcostLofLplacin
gLandLreceivingLaLtypicalLorderLisL$15,LandLtheLannualLcostLofLcarryingLaLpackageLinLinventor
yLisL$1.50.LReflectionLGraphicsLusesL2,600LpackagesLofLpaperLeachLyear.LProductionLisLconst
ant,LandLtheLleadLtimeLtoLreceiveLanLorderLisLoneLweek.
TheLreorderLpointLis:
A) 25Lpackages.
B) 50Lpackages.
C) 100Lpackages.
D) 203Lpackages.
E) 225Lpackages.
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