Chapter 20-1
- 1.
All of the following are potential financial benefits of just-in-time EXCEPT:
- A.
Lower investments in inventories
- B.
Reducing manufacturing lead time
- C.
Reducing the risk of obsolescence
- D.
Lower investments in plant space for inventories
Correct Answer
C. Reducing the risk of obsolescence -
- 2.
Which of the following industries would have the highest cost of goods sold percentage relative to sales?
- A.
Computer manufacturers
- B.
Drug manufacturers
- C.
The percentage will usually depend on the success of a particular company.
- D.
Retail organizations
Correct Answer
D. Retail organizations -
- 3.
One disadvantage of an enterprise resource planning (ERP) system is:
- A.
The use of standard costing systems is not allowed
- B.
The systems increase lead times when purchasing material from a supplier
- C.
These systems are not in accordance with Generally Accepted Accounting Principles (GAAP)
- D.
The systems must often be customized to fit the strategic needs of the user
Correct Answer
D. The systems must often be customized to fit the strategic needs of the user -
- 4.
The annual relevant total costs are at a minimum when relevant:
- A.
Ordering costs are greater than the relevant carrying costs
- B.
None of these answers is correct.
- C.
Carrying costs are greater than the relevant ordering costs
- D.
Carrying costs are equal to relevant ordering costs
Correct Answer
D. Carrying costs are equal to relevant ordering costs -
- 5.
Which of the following is an assumption of the economic-order-quantity decision model?
- A.
The quantity ordered can vary at each reorder point.
- B.
Demand ordering costs and carrying costs fluctuate.
- C.
No stockouts occur.
- D.
There will be timely labor costs.
Correct Answer
C. No stockouts occur. -
- 6.
Relevant total costs in the economic-order-quantity decision model equal relevant ordering costs plus relevant:
- A.
Purchasing costs
- B.
Stockout costs
- C.
Quality costs
- D.
Carrying costs
Correct Answer
D. Carrying costs -
- 7.
The costs that result when features and characteristics of a product or service are not in conformance with the specifications are:
- A.
Inspection costs
- B.
Costs of quality
- C.
Design costs
- D.
Purchasing costs
Correct Answer
B. Costs of quality -
- 8.
A demand-pull system in which each component in a production line is produced immediately as needed by the next step in the production line is referred to as:
- A.
Economic order quantity
- B.
Materials requirements planning
- C.
Just-in-time purchasing
- D.
Relevant total costs
Correct Answer
C. Just-in-time purchasing -
- 9.
A costing system that omits recording some or all of the journal entries relating to the cycle from purchase of direct materials to the sale of finished goods is called:
- A.
Synchronous costing
- B.
Dependent costing
- C.
Sequential costing
- D.
Backflush costing
Correct Answer
D. Backflush costing -
- 10.
Obsolescence is an example of which cost category?
- A.
Carrying costs
- B.
Labor costs
- C.
Quality costs
- D.
Ordering costs
Correct Answer
A. Carrying costs -
- 11.
The reorder point is simplest to compute when:
- A.
The safety stock amount never varies
- B.
The number of units sold varies
- C.
The relevant ordering costs and the relevant carrying costs are equal
- D.
Both demand and purchase-order lead times are known with certainty
Correct Answer
D. Both demand and purchase-order lead times are known with certainty -
- 12.
When using a vendor-managed inventory system to enhance the features of supply chain management, a challenging issue is:
- A.
Potentially incompatible information systems
- B.
The sharing of accurate, timely, and relevant information about sales forecasts
- C.
Problems of communication and trust
- D.
All of the above
Correct Answer
D. All of the above -
- 13.
The costs that result when a company runs out of a particular item for which there is a customer demand are:
- A.
EOQ estimation costs
- B.
Shrinkage costs
- C.
Shortage costs
- D.
Stockout costs
Correct Answer
D. Stockout costs -
- 14.
A grouping of all the different types of equipment used to make a given product is referred to as:
- A.
Total quality management
- B.
Economic order quantity
- C.
Materials requirements planning
- D.
Manufacturing cells
Correct Answer
D. Manufacturing cells -
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Current Version
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Jan 18, 2013Quiz Edited by
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Nov 01, 2010Quiz Created by
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