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Exam 20: Inventory Management, just-In-Time, and Simplified Costing Methods

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Question 81

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Answer the following questions using the information below: Short Grass Incorporated is a distributor of golf balls. Martin's Golf Supplies is a local retail outlet which sells golf balls. Martin's purchases the golf balls from Short Grass Incorporated at $0.75 per ball; the golf balls are shipped in cartons of 72. Short Grass Incorporated pays all incoming freight, and Martin's Golf Supplies does not inspect the balls due to Short Grass' reputation for high quality. Annual demand is 155,520 golf balls at a rate of 2,991 balls per week. Martin's Golf Supplies earns 12% on its cash investments. The purchase-order lead time is one week. The following cost data are available: $\begin{array} { l } \text { Relevant ordering costs per purchase order}&\$125.00 \\ \text {arrying costs per carton per year: }& \\ \text {Relevant insurance, materials handling, }& \\ \text {breakage, etc., per year }&\$0.77 \\\end{array}$ -What is the economic order quantity?

A) 180 cartons
B) 273 cartons
C) 270 cartons
D) 360 cartons

E) None of the above
F) A) and B)

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Question 82

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Delinz Company can predict with virtual certainty the demand for its products.Delinz's sells 75 hams per week.Purchase-order lead time is 3 weeks and the economic-order quantity is 150 hams.What is the reorder point?

A) 675 hams
B) 225 hams
C) 450 hams
D) 150 hams

E) B) and D)
F) B) and C)

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Question 83

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What is a supply chain,and what are the benefits of a supply chain analysis? Provide an example of these benefits.

Inventory management is the planning,organizing,and controlling activities that focus on the flow of materials into,through,and out of the organization.

Picture Company has one particular product that has an annual demand of 5,000 units.Total manufacturing costs per unit total $50.Ordering costs for the product total $60 per purchase order.Currently,the carrying costs per unit are 25% of manufacturing costs. Required: Determine the economic manufacturing order quantity.

Answer the following questions using the information below: The Allianz Company produces a specialty wood furniture product, and has the following information available concerning its inventory items: $\begin{array} { l } \text {Relevant ordering costs per purchase order }&\$450 \\ \text {Relevant carrying costs per year for each package: }& \\ \text { Required annual return on investment}& 15\%\\ \text {Required other costs per wear }& \$4\\\end{array}$ Annual demand is 30,000 packages per year. The purchase price per package is $48. -What is the annual relevant carrying costs?

Relevant total costs in the economic order quantity decision model equal relevant ordering costs plus relevant ________.

In a backflush-costing system,no record of work in process appears in the accounting records.

Among different types of costs associated with inventory,the costs that result when features and characteristics of a product or service are not in conformance with the customer specifications are ________.

Which of the following statements is true of the the economic order quantity decision model?

To determine outputs at each stage of production,MRP uses a bill of materials detailing the materials,components,and subassemblies for each final product.