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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. A push-through system that manufactures finished goods for inventory on the basis of demand forecasts is referred to as:
2. The annual relevant total costs are at a minimum when relevant:
3. Lean accounting:
4. The costs associated with storage are an example of which cost category?
5. Obsolescence is an example of which cost category?
6. All inventory costs are available in financial accounting systems.
7. The EOQ model is solved using calculus but the key intuition is that relevant total costs are minimized when relevant ordering costs equal relevant carrying costs.
8. Increases in the carrying cost and decreases in the ordering cost per purchase order result in:
9. Shrinkage is measured by adding (a) the cost of the inventory recorded on the books in the absence of theft and other incidents just mentioned, and (b) the cost of inventory when physically counted.
10. Costs of setting up a production run are analogous to ordering costs in the Economic Order Quantity (EOQ) model.
11. Which of the following industries would have the highest cost of goods sold percentage relative to sales?
12. Carrying costs arise when an organization experiences an ability to deliver its goods to its customers.
13. Which of the following is an assumption of the economic-order-quantity decision model?
14. Quality costs include:
15. The time from when an order is received by manufacturing until it becomes a finished good is referred to as:
16. Inventory management is the planning, organizing, and controlling activities that focus on the flow of materials into, through, and from the organization.
17. The implications of JIT and backflush costing systems for activity-based costing systems include:
18. The optimal safety stock level is the quantity of safety stock that minimizes the sum of the annual relevant:
19. A financial benefit of a just-in-time system is that inventory carrying costs are reduced.
20. 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.
21. A system that comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities is known as a(n):
22. The simplest version of the Economic Order Quantity model incorporates only ordering costs, carrying costs, and purchasing costs into the calculation.
23. The economic order quantity ignores:
24. Just-in-time purchasing requires:
25. Relevant opportunity cost of capital is the return forgone by investing capital in inventory rather than elsewhere.

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