Cost Accounting - Materials

The following persons are involved in the physical control of materials in the company except:

A. Cost Accountant

B. Purchasing Agent

C. Production Deparment Supervisor

D. Receiving Clerk

A. Cost Accountant

EOQ is the order quantity that ___

A. Minimizes the total ordering cost

B. Minimizes the safety stock

C. Minimizes total inventory costs

D. Minimizes total carrying costs

C. Minimizes total inventory costs

The expense that theoretically is not a correct part of inventory cost is:

A. Freight in

B. Freight out

C. Inspection costs

D. Accounting costs for materials received

B. Freight out

Theoretically, cash discounts permitted on purchased raw materials should be:

A. added to other income, whether taken or not

B. added to other income, only if taken

C. deducted from inventory, whether taken or not

D. deducted from inventory, only if taken

C. deducted from inventory, whether taken or not

The material requisition:

A. is the list of materials requirement for each step in the production sequence

B. informs the purchasing agent of the quantity and kind of materials needed

C. certifies quantities received and reports results of inspection and testing

D. authorizes the storeroom to deliver types and quantities of materials to a given department

D. authorizes the storeroom to deliver types and quantities of materials to a given department

The cost of insurance and taxes are included to

A. Setup cost

B. Cost of ordering

C. Cost of shortages

D. Inventory carrying cost

D. Inventory carrying cost

The purchase order

A. is the list of materials requirements for each step in the production sequence

B. informs the purchasing agent of the quantity and kind of materials needed

C. contracts for quantities to be delivered

D. certifies quantities received and reports results of inspection and testing

C. contracts for quantities to be delivered

The receiving report

A. is the list of material requirements for each step in the production sequence

B. informs the purchasing agent of the quantity and kind of materials needed

C. contracts for quantities to be delivered

D. certifies quantities received and reports results of inspection and testing

D. certifies quantities received and reports results of inspection and testing

The purchase requisition may originate from all of the following except:

A. a storeroom employee

B. a materials record clerk

C. a receiving department clerk

D. a research, engineering, or other department employee who needs materials of a special nature

C. a receiving department clerk

The receiving department does all of the following except:

A. unloads and unpacks incoming materials

B. keeps informed concerning sources of supply, prices, and delivery schedules

C. matches materials received with descriptions on purchase orders

D. arranges for inspection, when necessary

B. keeps informed concerning sources of supply, prices, and delivery schedules

It is an authorization signed by the purchasing agent sent to a vendor (supplier) to supply goods at the agreed price, specification, terms and conditions of the product and at a specified time and place of delivery

A. Purchase order

B. Material requisition form

C. Bill of materials

D. Receiving report

A. Purchase order

A company has been ordering more than the EOQ. This would result in":

A. more frequent order points

B. carrying costs greater than order costs

C. equal safety stock costs and carrying costs

D. carrying costs less than order costs

B. carrying costs greater than order costs

The factor that need not be considered when calculating an inventory EOQ

A. annual sales of a product

B. safety stock level

C. order-placing costs

D. storage costs

B. safety stock level

The method of inventory that best approximates specific identification of the actual flow of costs and units in most manufacturing situations is:

A. first-in, first-out

B. last-in, first-out

C. base stock

D. average cost

A. FIFO

Which statement is correct with respect to inventories?

A. The FIFO method assumes that the earliest goods purchased are the last to be sold

B. Under the FIFO method, the ending inventory is based on the latest units purchased

C. FIFO seldom coincides with the actual physical flow of inventory

D. It is generally good business management to sell the most recently acquired goods first

B. Under the FIFO method, the ending inventory is based on the latest units purchased

Which of the following is an example of a direct material?

A. Lubricant for factory machines

B. Wood used to build a table

C. Electricity used to power the factory

D. Salary of the factory supervisor

B. Wood used to build a table

What does the term “lead time” refer to in material cost accounting?

A. The time it takes to manufacture a product

B. The time it takes to receive an order after it has been placed

C. The time it takes to sell a product

D. The time it takes to process an invoice

B. The time it takes to receive an order after it has been placed

What is the formula for calculating Economic Order Quantity (EOQ)?

A. EOQ = SQ((2 Annual Demand Ordering Cost) / Holding Cost)

B. EOQ = (Annual Demand * Ordering Cost) / Holding Cost

C. EOQ = (Annual Demand * Holding Cost) / Ordering Cost

D. EOQ = SQ((Annual Demand * Holding Cost) / Ordering Cost)

A. EOQ = SQ((2 Annual Demand Ordering Cost) / Holding Cost)

What is the formula for calculating the cost of direct materials used?

A. Beginning Inventory + Purchases - Ending Inventory

B. Beginning Inventory - Purchases + Ending Inventory

C. Purchases - Ending Inventory

D. Beginning Inventory + Purchases

A. Beginning Inventory + Purchases - Ending Inventory

In the period of rising prices, the method of inventory pricing that will result to the lowest cost of inventory sold is:

A. first-in, first-out

B. last-in, first-out

C. base stock

D. average cost

A. first-in, first-out