Be Strong
Search
Monday, December 6, 2010
Chapter 10: Accounts Receivable and Inventory Management MCQs
Multiple-Choice Quiz
Chapter 10: Accounts Receivable and Inventory Management
Just click on the button next to each answer and you'll get immediate feedback.
1.
A firm's inventory turnover (IT) is 5 times on a cost of goods sold (COGS) of $800,000. If the IT is improved to 8 times while the COGS remains the same, a substantial amount of funds is released from or additionally invested in inventory. In fact,
$160,000 is released.
$100,000 is additionally invested.
$60,000 is additionally invested.
$60,000 is released.
Correct!
IT = 5 = $800,000/ INVENTORY (old)
Therefore, INVENTORY (old) = $800,000/5 = $160,000
IT = 8 = $800,000/ INVENTORY (new)
Therefore, INVENTORY (new) = $800,000/8 = $100,000
$160,000 - $100,000 = $60,000 released (i.e., Source of Funds)
2.
Ninety-percent of Vogel Bird Seed's total sales of $600,000 is on credit. If its year-end receivables turnover is 5, the average collection period (based on a 365-day year) and the year-end receivables are, respectively:
365 days and $108,000.
73 days and $120,000.
73 days and $108,000.
Correct!
RTD = 365 days/5 = 73 days
(.9)$600,000 = $540,000 in credit sales
RT = 5 = $540,000/Receivables
Therefore, Receivables = $540,000/5 = $108,000
81 days and $108,000.
3.
If EOQ = 360 units, order costs are $5 per order, and carrying costs are $.20 per unit, what is the usage in units?
129,600 units
2,592 units
Correct!
EOQ = SQRT[ (2)(O)(S)/(C) ]
360 = SQRT[ (2)($5)(S)/($.20) ]
360 = SQRT[ (50)(S) ]
(360)(360) = 129,600 = (50)(S)
S = 129,600/50 = 2,592
25,920 units
18,720 units
4.
Costs of not carrying enough inventory include:
lost sales.
customer disappointment.
possible worker layoffs.
all of these.
5.
Which of the following relationships hold true for safety stock?
the greater the risk of running out of stock, the smaller the safety of stock.
the larger the opportunity cost of the funds invested in inventory, the larger the safety
stock.
the greater the uncertainty associated with forecasted demand, the smaller the safety
stock.
the higher the profit margin per unit, the higher the safety stock necessary.
6.
Increasing the credit period from 30 to 60 days, in response to a similar action taken by all of our competitors, would likely result in:
an increase in the average collection period.
a decrease in bad debt losses.
an increase in sales.
higher profits.
7.
The credit policy of Spurling Products is "1.5/10, net 35." At present 30% of the customers take the discount, 62% pay within the net period, and the rest pay within 45 days of invoice. What would receivables be if all customers took the cash discount?
Lower than the present level.
No change from the present level.
Higher than the present level.
Unable to determine without more information.
8.
An increase in the firm's receivable turnover ratio means that:
it is collecting credit sales more quickly than before.
cash sales have decreased.
it has initiated more liberal credit terms.
inventories have increased.
9.
Receiving a required inventory item at the exact time needed.
ABC
JIT
FOB
PERT
10.
EOQ is the order quantity that
over our planning horizon.
minimizes total ordering costs
minimizes total carrying costs
minimizes total inventory costs
the required safety stock
11.
A
B2B exchange
is a
Internet marketplace that matches supply and demand by real-time auction bidding.
buyer-to-business
business-to-business
business-to-buyer
buyer-to-buyer
No comments:
Post a Comment
Newer Post
Older Post
Home
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment