Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Textbook Question
Chapter 20, Problem 18E
Which of the following describes the economic order quantity (EOQ)?
- a. It is associated with a pull inventory system.
- b. It is the heart of a JIT purchasing system.
- c. It minimizes total ordering and carrying costs.
- d. It minimizes stock-out costs.
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Chapter 20 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 20 - What are ordering costs? What are setup costs?...Ch. 20 - Explain why, in the traditional view of inventory,...Ch. 20 - Discuss the traditional reasons for carrying...Ch. 20 - Prob. 4DQCh. 20 - Explain how safety stock is used to deal with...Ch. 20 - Prob. 6DQCh. 20 - What approach does JIT take to minimize total...Ch. 20 - One reason for inventory is to prevent shutdowns....Ch. 20 - Prob. 9DQCh. 20 - Explain how long-term contractual relationships...
Ch. 20 - What is a constraint? An internal constraint? An...Ch. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Explain how lowering inventory produces better...Ch. 20 - Prob. 15DQCh. 20 - Thomas Corporation produces heating units. The...Ch. 20 - Sterling Corporation has an EOQ of 5,000 units....Ch. 20 - Patz Company produces two types of machine parts:...Ch. 20 - Prob. 4CECh. 20 - See Cornerstone Exercise 20.4. Fisher Company has...Ch. 20 - Ottis, Inc., uses 640,000 plastic housing units...Ch. 20 - Ottis, Inc., uses 640,000 plastic housing units...Ch. 20 - Melchar Company uses 78,125 pounds of oats each...Ch. 20 - Prob. 9ECh. 20 - Morrison Manufacturing produces casings for sewing...Ch. 20 - Morrison Manufacturing produces casings for sewing...Ch. 20 - Refer to Exercise 20.10. Assume the economic lot...Ch. 20 - Eyring Manufacturing produces a component used in...Ch. 20 - Hales Company produces a product that requires two...Ch. 20 - Many companies have viewed JIT as a panaceaa...Ch. 20 - Prob. 16ECh. 20 - Prob. 17ECh. 20 - Which of the following describes the economic...Ch. 20 - The economic order quantity (EOQ) for Part X15 is...Ch. 20 - A JIT inventory management system maintains which...Ch. 20 - For the theory of constraints, which of the...Ch. 20 - A dedicated pharmaceutical plant uses the theory...Ch. 20 - Prob. 23PCh. 20 - Burnett Company produces two types of gears: Model...Ch. 20 - Taylor Company produces two industrial cleansers...Ch. 20 - Prob. 26PCh. 20 - Calen Company manufactures and sells three...Ch. 20 - Confer Company produces two different metal...Ch. 20 - Pratt Company produces two replacement parts for a...Ch. 20 - Bountiful Manufacturing produces two types of bike...
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- Write out the formula for the total costs of carrying and ordering inventory, and then use the formula to derive the EOQ model.arrow_forwardWhat are some inventory ordering costs? As defined here, are thesecosts fixed or variable?arrow_forwardDefine Inventory Turnover? Explain what the results mean and provide an example.arrow_forward
- What Is The Lean Perspective on Inventory?arrow_forwardIf merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income? Select one: a. average cost. b. LIFO. c. FIFO. d. weighted average. e. All methods will result in the same figure of net income.arrow_forwardWhich of the following is an assumption of cost-volume-profit analysis? a. The inventory quantities during the period can change. b. Within the relevant range of operating activity, the efficiency of operations can change. c. Costs can be divided into fixed and variable components. d. The sales mix can vary. 5 Which of the following is an assumption of cost-volume-profit analysis? a. The inventory quantities during the period can change. b. Within the relevant range of operating activity, the efficiency of operations can change. c. Costs can be divided into fixed and variable components. d. The sales mix can vary.arrow_forward
- How do you measure gross margin return on inventory(GMROI)?arrow_forwardWhat is Re-order quantity? What is Re-order level? What is Maximum stocklevel? With respect to cost accounting explain the above.arrow_forwardWrite out the formula for the total costs of carrying and ordering inventory, and then use theformula to derive the EOQ model.arrow_forward
- 1. Inventory management aims at a. increase customer service levels b. All of the above c. Minimize stock holding cost d. forecast inventory 2. Which of the below is a reason for holding cost a. economies of scale b. Minimize stock holding cost c. To meet demand and supply d. All of the abovearrow_forwardIn the economic order quantity model the return on capital that is forgotten when it is invested in inventory is a/an a. Carrying costs b. Exclusion in the EOQ computation c. Irrelevant cost d. Order costarrow_forwardExplain an example how to calculate inventory turnover ratio.arrow_forward
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Inventory management; Author: The Finance Storyteller;https://www.youtube.com/watch?v=DZhHSR4_9B4;License: Standard Youtube License