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Cost Accounting 101 Practice Test: Inventory Management, Just-in-Time, and Simplified Costing Methods
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Inventory management is the process of ordering, storing, using, and selling a company's inventory. Just-in-time (JIT) is an inventory management method that involves receiving goods from suppliers only as they are needed.  Here are some inventory costing methods: First In, First Out (FIFO): Companies sell the inventory first that they bought first. Last In, First Out (LIFO): Companies sell the inventory first that they bought last. Weighted Average Cost (WAC) Specific Identification  JIT's main objective is to reduce inventory holding costs and increase inventory turnover. It requires... Show more
Cost Accounting 101 Practice Test: Inventory Management, Just-in-Time, and Simplified Costing Methods
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25 Questions

1. Traditional normal and standard costing systems use:
2. The annual relevant carrying costs of inventory consists of the sum of the:
3. A 'push-through' system, often described as a just-in-time system, emphasizes simplicity and close coordination among work centers.
4. One DISADVANTAGE of an enterprise resource planning (ERP) system is:
5. Increases in the carrying cost and decreases in the ordering cost per purchase order result in:
6. The reorder point is simplest to compute when:
7. Just-in-time purchasing requires:
8. Backflush costing is a costing system that omits recording some or all of the journal entries relating to the stages from purchase of direct materials to the sales of finished goods.
9. The simplest version of the Economic Order Quantity model incorporates only ordering costs, carrying costs, and purchasing costs into the calculation.
10. Companies that have fast manufacturing lead times usually find that a version of backflush costing will report cost numbers similar to what a sequential costing approach would report.
11. Lean accounting:
12. Lean accounting is a costing method that supports creating value for the customer by costing the entire value stream, NOT individual products or departments, thereby eliminating waste in the accounting process.
13. Which of the following industries would have the highest cost of goods sold percentage relative to sales?
14. The costs that result when a company holds an inventory of goods for sale:
15. Sharing inventory data throughout the supply chain leads to more rush" orders occurring."
16. Companies that implement JIT purchasing will switch their suppliers when another supplier offers a lower price.
17. Quality costs include:
18. Shrinkage costs result from theft by outsiders, embezzlement by employees, misclassifications, and clerical errors.
19. A 'demand-pull' system, often described as a materials requirement planning system, focuses first on the forecasted amount and timing of finished goods and then determines the demand for materials components and subassemblies at each of the prior stages of production.
20. Which of the following is an assumption of the economic-order-quantity decision model?
21. The costs of preparing, issuing, and paying purchase orders, plus receiving and inspecting the items included in orders is:
22. When using a vendor-managed inventory system to enhance the features of supply chain management, a challenging issue is:
23. The implications of JIT and backflush costing systems for activity-based costing systems include:
24. Costs of setting up a production run are analogous to ordering costs in the Economic Order Quantity (EOQ) model.
25. The opportunity cost of the stockout includes lost contribution margin on the sale NOT made plus any contribution margin lost on future sales due to customer ill will.

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