chapter 20

chapter 20 - Cost Accounting, 13e (Horngren et al.) Chapter...

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Cost Accounting , 13e (Horngren et al.) Chapter 20 Inventory Management, Just-in-Time, and Simplified Costing Methods 1) Retailers generally have a high percentage of net income to revenues. Answer: FALSE Explanation: Retailers have a low percentage of net income to revenues. Diff: 2 Terms: inventory management Objective: 1 AACSB: Analytical skills 2) Inventory management is the planning, organizing, and controlling activities that focus on the flow of materials into, through, and from the organization. Answer: TRUE Diff: 2 Terms: inventory management Objective: 1 AACSB: Analytical skills 3) Purchasing costs generally include the freight and transportation costs on goods acquired from suppliers. Answer: TRUE Diff: 2 Terms: purchasing costs Objective: 1 AACSB: Analytical skills 4) Expediting costs of a stockout include the additional ordering costs, plus any associated transportation costs. Answer: TRUE Explanation: Expediting costs include the associated transportation costs. Diff: 2 Terms: stockout costs Objective: 1 AACSB: Analytical skills 5) Carrying costs arise when an organization experiences an ability to deliver its goods to its customers. Answer: FALSE Explanation: Carrying costs arise when an organization holds its goods for sale. Diff: 2 Terms: carrying costs Objective: 1 AACSB: Analytical skills 1
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6) Shrinkage costs result from water damage to clothing and other soft goods. Answer: FALSE Explanation: Shrinkage costs result from theft by outsiders, embezzlement by employees, misclassifications, and clerical errors. Diff: 2 Terms: shrinkage Objective: 1 AACSB: Analytical skills 7) Shrinkage is measured by comparing the cost of inventory on the books to the cost of inventory physically counted. Answer: TRUE Diff: 2 Terms: shrinkage Objective: 1 AACSB: Analytical skills 8) All inventory costs are available in financial accounting systems. Answer: FALSE Explanation: Opportunity costs are rarely recorded in formal accounting systems and they are often a very significant cost component. Diff: 2 Terms: shrinkage Objective: 1 AACSB: Analytical skills 9) Sharing inventory data throughout the supply chain leads to more "rush" orders occurring. Answer: FALSE Explanation: Sharing inventory data throughout the supply chain leads to fewer "rush" orders occurring. Diff: 2 Terms: inventory management Objective: 1 AACSB: Analytical skills 10) The simplest version of the Economic Order Quantity model incorporates only ordering costs, carrying costs, and purchasing costs into the calculation. Answer: FALSE Explanation: Purchasing costs are ignored in the Economic Order Quantity. Diff: 2 Terms: economic order quantity (EOQ) Objective: 2 AACSB: Analytical skills 2
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11) To determine the Economic Order Quantity, the relevant ordering costs are minimized and the relevant carrying costs are maximized. Answer:
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chapter 20 - Cost Accounting, 13e (Horngren et al.) Chapter...

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