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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 positive aspect of backflush costing is the presence of the visible audit trail.
2. The annual relevant total costs are at a minimum when relevant:
3. 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.
4. In a just-in-time system, suppliers are selected primarily on the basis of their ability to provide materials and products at the lowest possible price.
5. 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.
6. Sharing inventory data throughout the supply chain leads to more rush" orders occurring."
7. The time from when an order is received by manufacturing until it becomes a finished good is referred to as:
8. The implications of JIT and backflush costing systems for activity-based costing systems include:
9. Relevant opportunity cost of capital is the return forgone by investing capital in inventory rather than elsewhere.
10. Quality costs include:
11. Companies that would benefit from backflush costing include companies:
12. Costs of setting up a production run are analogous to ordering costs in the Economic Order Quantity (EOQ) model.
13. The costs that result from theft of inventory are:
14. The time required to get equipment, tools, and materials ready to start production is referred to as:
15. Retailers generally have a high percentage of net income to revenues.
16. 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.
17. A grouping of all the different types of equipment used to make a given product is referred to as:
18. The purchase-order lead time is the:
19. The costs of goods acquired from suppliers including incoming freight or transportation costs are:
20. 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.
21. The costs that result when a company holds an inventory of goods for sale:
22. The optimal safety stock level is the quantity of safety stock that minimizes the sum of the annual relevant:
23. Which of the following statements about the economic-order-quantity decision model is FALSE?
24. Just-in-time systems are similar to materials requirement planning systems in that both systems are demand-pull systems.
25. One DISADVANTAGE of an enterprise resource planning (ERP) system is:

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