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  65) For supply item ABC, Andrews Company has been ordering 125 units based on the recommendation of the salesperson who calls on the company monthly. A new purchasing agent has been hired by the company who wants to start using the economic-order-quantity method and its supporting decision elements. She has gathered the following information:   Annual demand in units 250 Days used per year 250 Lead time, in days 10 Ordering costs $100 Annual unit carrying costs $20   Required: Determine the EOQ, average inventory, orders per year, average daily demand, reorder point, annual ordering costs, and annual carrying […]

  2.3   Interpret unitized fixed costs appropriately when making cost management decisions.   1) A unit cost is computed by dividing a total cost by some number of units.   2) Unit costs are considered to be an average cost per unit. 3) When a manager is making a decision based on cost figures, it is preferable that he (she) thinks in terms of unit costs.   4) When 50,000 units are produced the fixed costs are $10 per unit. Therefore when 100,000 units are produced fixed costs will remain at $10 per unit.   5) Unit costs and average […]

  21) In selecting capital projects, organizations choose A) the alternative that matches the RRR. B) the alternative that has revenues that exceed its costs. C) the alternative that has the highest revenues. D) the alternative that has the longest time horizon, but also exceeds the RRR. E) the alternative that provides benefits that exceed predicted costs by the greatest amount.   22) The first step in the capital budgeting decision process model is to A) establish assumptions common for each potential capital investment. B) obtain appropriate sources of financing for investments. C) identify capital expenditures relevant to accomplishing strategic […]

  62) An inventory item of XYZ Manufacturing has an average daily demand of 10 units with a maximum daily demand of 12 units. The economic order quantity is 200 units. The reorder point is 50 units. Safety stocks are set at 94 units.   Required: a.Determine the inventory level at the time of reordering. b.Determine the purchase order lead time. d.Determine the maximum purchase order lead time that the company can experience before it has a stockout. 63) Ralph was in the process of completing the quarterly planning for the purchasing department when a major computer malfunction lost most […]

  26) The method that measures the time it will take to recoup, in the form of cash inflows, the total dollars invested in a project is called A) the accrued accounting rate of return method. B) payback. C) internal rate of return method. D) the book-value method. E) the NPV. 27) The net initial investment for a new mainframe computer is $2,000,000. Annual cash flows are expected to increase by $800,000 per year. The equipment has a 10-year useful life. What is the payback period? A) 4.00 years B) 2.50 years C) 2.00 years D) 1.75 years E) 0.75 […]