CUSTOM COST ACCT 2521 SWP W/ ACCESS
17th Edition
ISBN: 9781323674116
Author: Pearson
Publisher: Pearson Custom Publishing
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Textbook Question
Chapter 20, Problem 20.16MCQ
The order size associated with the economic-order-quantity (EOQ) model will necessarily decline if:
- a. Ordering costs rise
- b. Storage costs rise
- c. Insurance costs for materials in storage fall
- d. Stockout costs rise
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The order size associated with the economic-order-quantity (EOQ) model will necessarily decline if:a. Ordering costs riseb. Storage costs risec. Insurance costs for materials in storage falld. Stockout costs rise
CVP analysis makes all of the following assumptions except
a change in volume is the only factor that affects costs.
revenues are linear throughout the relevant range.
the mix of products will not change.
inventory levels will increase.
The fundamental EOQ model a. provides for fluctuating lead times during reorder cycles. b. is relatively insensitive to errors in demand, procurement costs, and carrying costs. c. focuses on the trade-off between production costs and carrying costs. d. is stochastic in nature. e. is best used in conjunction with a periodic inventory system.
Chapter 20 Solutions
CUSTOM COST ACCT 2521 SWP W/ ACCESS
Ch. 20 - Why do better decisions regarding the purchasing...Ch. 20 - Name six cost categories that are important in...Ch. 20 - What assumptions are made when using the simplest...Ch. 20 - Give examples of costs included in annual carrying...Ch. 20 - Give three examples of opportunity costs that...Ch. 20 - What are the steps in computing the cost of a...Ch. 20 - Why might goal-congruence issues arise when...Ch. 20 - JIT purchasing has many benefits but also some...Ch. 20 - What are three factors causing reductions in the...Ch. 20 - You should always choose the supplier who offers...
Ch. 20 - Prob. 20.11QCh. 20 - What are the main features of JIT production, and...Ch. 20 - Distinguish inventory-costing systems using...Ch. 20 - Describe three different versions of backflush...Ch. 20 - Discuss the differences between lean accounting...Ch. 20 - The order size associated with the...Ch. 20 - Prob. 20.17MCQCh. 20 - Prob. 20.18MCQCh. 20 - Lyle Co. has only one product line. For that line,...Ch. 20 - Just-in-time inventory assumes all of the...Ch. 20 - Economic order quantity for retailer. Wonder Line...Ch. 20 - Economic order quantity, effect of parameter...Ch. 20 - EOQ for a retailer. The Fabric World sells fabrics...Ch. 20 - EOQ for manufacturer. Sk8 Company produces...Ch. 20 - Sensitivity of EOQ to changes in relevant ordering...Ch. 20 - JIT production, relevant benefits, relevant costs....Ch. 20 - Backflush costing and JIT production. Grand...Ch. 20 - Backflush costing, two trigger points, materials...Ch. 20 - Backflush costing, two trigger points, completion...Ch. 20 - Prob. 20.30PCh. 20 - Prob. 20.31PCh. 20 - Prob. 20.32PCh. 20 - Prob. 20.33PCh. 20 - JIT purchasing, relevant benefits, relevant costs....Ch. 20 - Supply-chain effects on total relevant inventory...Ch. 20 - Supply-chain effects on total relevant inventory...Ch. 20 - Backflush costing and JIT production. The Acton...Ch. 20 - Backflush, two trigger points, materials purchase...Ch. 20 - Backflush, two trigger points, completion of...Ch. 20 - Lean accounting. Reliable Security Devices (RSD)...Ch. 20 - JIT production, relevant benefits, relevant costs,...
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- The cost driver for demand creation activity is: a. Value of materials stored b. Number of orders c. Increase in sales d. Value of stockarrow_forwardState whether the following statements are true with reasons: Safety stock increases as demand increases To protect against stock outs, a large batch size is a need Economic order quantity is based on a balancing between inventory carrying cost and shortage costs. Lead time is the time interval elapsing between the placement of a replenishment order and the receipt of last installment of goods against the order.arrow_forwardWhich one of the following is a disadvantage of Mass Production system? a. Higher level of inventory at all levels and hence higher inventory cost. b. Larger space requirements. c. Breakdown of one machine will stop an entire production line. d. Higher cost due to frequent set up changes.arrow_forward
- It’s common in the electronics industry for unit costs of raw materials inventories to decline over time. In this environment, explain the difference between LIFO and FIFO, in terms of the effect on income and financial position. Assume that inventory quantities remain the same for the period.arrow_forwardDuring a period of rising inventory costs and stable output prices, describe how net income and total assets would differ depending upon whether LIFO or FIFO is applied. Explain how your answer would change if the company is experiencing declining inventory costs and stable output prices.arrow_forwardWhich one of the following is not considered an assumption of cost-volume-profit analysis? a. Costs are linear b. Sales mix of products sold does not change c. Selling price per unit changes with volume d. Costs can be divided into variable and fixed components e. Fixed cost per unit is not constantarrow_forward
- As compared with the FIFO method of costing inventories,does the LIFO method result in a larger or smallernet income in a period of rising prices? What is the comparativeeffect on net income in a period of falling prices?arrow_forwardThe optimal quantity order to reduce the overall cost is usually stated as EOQ. why it is related to one time order? How carrying and ordering cost is related to each other?arrow_forwardIn the immediate write-off approach, under-applied overhead is regarded as: a. an increase in current income b. an increase in the cost of inventory c. a decrease in cost of goods sold d. an increase in cost of goods soldarrow_forward
- Which of the following would reduce net profit margin but have no effect on gross profit margin?a) Reducing the commission rate paid to salesmen.b) Negotiating a lower purchase price for raw materials.c) An increase in IT support costs for the accounting package used.d) Increasing the expected economic lives of machinery used in the production function.arrow_forwardIf the ordering cost triples in an EOQ model, while the remaining values stay constant, how will the EOQ change? How sensitive is the EOQ to variations in demand or costs?arrow_forwardFirst: The inventory value shown on the balance sheet is generally higher under absorption costing than under variable costing. Second: Under variable costing, inventoriable product costs consist of direct materials, direct labor, variable manufacturing overhead and variable selling and administration expenses. * a. Both statements are true b. Only the first statement is true c. Only the second statement is true d. Both statements are falsearrow_forward
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