Question :
MULTIPLE CHOICE.
Choose the one alternative that best completes the statement : 1196173
MULTIPLE CHOICE.
Choose the one alternative that best completes the statement or answers the question. 20)
Costs associated with holding inventories and the resulting opportunity cost of the investment tied up in inventory fall into which of the following categories? 20)
______ A)
stockin costs B)
stockout costs C)
ordering costs D)
carrying costs E)
quality costs
21)
Costs incurred when preparing and issuing purchase orders are included in which of the following categories? 21)
______ A)
stockin costs B)
ordering costs C)
carrying costs D)
purchasing costs E)
stockout costs
22)
An important component in several of the cost categories which are not typically recorded in accounting systems is 22)
______ A)
quality costs. B)
ordering costs. C)
labour costs. D)
quantity costs. E)
opportunity costs.
23)
The simplest version of the economic-order-quantity decision model assumes all of the following EXCEPT 23)
______ A)
demand ordering costs and carrying costs are certain. B)
the same fixed quantity is ordered at each reorder point. C)
no stockouts occur. D)
purchasing costs per unit depend on the quantity ordered. E)
purchase order lead time is certain.
24)
The purchase-order lead time is 24)
______ A)
the discrepancies in purchase orders. B)
the difference between the time an order is placed and delivered. C)
the discrepancies in inventory sheets. D)
the difference between the products ordered and the products received. E)
the time required to correct errors in the products received.
Use the information below to answer the following question(s).
Stereo Goods is a distributor of video tapes. Video Mart is a local retail outlet which sells blank and recorded videos. Video Mart purchases tapes from Stereo Goods at $5.00 per tape; tapes are shipped in packages of 25. Stereo Goods pays all incoming freight, and Video Mart does not inspect the tapes due to Stereo Goods’ reputation for high quality. Annual demand is 104,000 tapes at a rate of 2,000 tapes per week. Video Mart earns 15% on its cash investments. The purchase-order lead time is one week. The following cost data are available:
Relevant ordering costs per purchase order $94.50
Carrying costs per package per year:
Relevant insurance, materials handling,
breakage, etc., per year$ 3.50
25)
What is the economic-order quantity? 25)
______ A)
652 packages B)
188 packages C)
200 packages D)
874 packages E)
198 packages
26)
What are the total relevant inventory costs? 26)
______ A)
$1,951.70 B)
$4,182.56 C)
$2.560.20 D)
$2,462.41 E)
$6,150.50
27)
How many deliveries will be made during each time period? 27)
______ A)
29.4 deliveries B)
22.1 deliveries C)
29.6 deliveries D)
32.0 deliveries E)
26.0 deliveries
Use the information below to answer the following question(s).
Office Supply House purchases 4,160 reams of paper per year, ordered in lots of 80 reams per week at $150 per ream. The vendor covers all shipping costs. Office Supply House is not required to inspect the shipment upon entry. Office Supply House earns 20% on its cash investments. The purchase-order lead time is two weeks. The following cost data are available:
Relevant ordering costs per purchase order$53.75
Relevant insurance, materials handling, breakage,
and so on, per year$ 4.25
28)
What is the economic-order quantity? 28)
______ A)
324 reams B)
110 reams C)
100 reams D)
114 reams E)
235 reams
29)
What are the total relevant inventory costs at the economic-order quantity? 29)
______ A)
$4,862.84 B)
$4,975.86 C)
$6,238.62 D)
$3,913.65 E)
$3,948.50
30)
What are the total relevant costs assuming the quantity ordered equals 80 reams? 30)
______ A)
$5,326.49 B)
$3,948.50 C)
$3,913.65 D)
$4,165.00 E)
$4,075.25
