1. At the economic order quantity
   1. Total annual inventor costs holding costs and ordering costs are all minimized
   2. Total annual inventory costs and holding costs are minimized
   3. Total annual inventory costs are minimized and hold costs equal ordering costs
   4. Total annual inventory costs are minimized and holds costs exceed ordering costs
   5. Total annual inventory cost are minimized and ordering costs exceed holding costs
2. Consider the following statements regarding traditional costing systems:

1. Overhead costs are applied to products on the basis volume related measures
2. All manufacturing costs are easily traceable to the goods produced
3. Traditional costing systems tent to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements.

Which of the above statements are true?

1. I only
2. II only
3. III only
4. I and II
5. II and III

1. 3....Alamos customer service dept follows up on a customer telephone inquiry. During a recent period, the dept. initiated 7000 calls and incurred costs of 203,000. If 2,940 of these calls were for the companys wholesale operation (the remainder were for the retail division) costs allocated to the retail division should amount to:
   1. 0
   2. 29
   3. 85,260
   4. 117,740
   5. 203,000

4,

1. 4. Which of the following is classified as an inventory shortage cost?
   1. Purchase order preparations
   2. Production disruption
   3. Lost sales and lost customers
   4. Spoilage
   5. Production disruption lost sales and lost customers

1. 5, St James inc currently uses traditional costing procedures applying 800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours, production setups, and number of parts components as cost drivers. Data on the cost pools and respective driver volumes follow

He over head cost allocated to Beta by using activity-based costing procedures would be:

1. Minimized View
2. 2
3. 40,000
4. 356,000
5. 444,000
6. 560,000

1. 6 Inventory holding costs typically include:
   1. Clerical costs of purchased order preparations
   2. Costs of deterioration theft or spoilage
   3. Costs associated with lost sales to customer
   4. Forgone interest on money tied up in inventory
   5. Costs deterioration, theft, or spoilage and forgone interest on money tied up in inventory

1. 7 During a recent accounting period. Martys shipping dept processed 26 orders. Each order typically takes 4 hours to complete, however the average time increased to 5 hours because of various dept inefficiencies. If the shipping labor is paid $14 per hour the companys non value cost would be:
   1. 0
   2. 56
   3. 364
   4. 1,456
   5. 1,820

1. 8 Consider the following statements

1. Product diversity creates costing problems because diverse products tend to utilize manufacturing activities in different ways
2. Overhead costs that are not incurred at the unit level create costing problems because such costs do not vary with the traditional application bases such as direct labor hours or machine hours
3. Product diversity typically exists with a single product 9n=ball pint pen) is a madein different colors

Which statement is true:

1. I only
2. II only
3. I and II
4. I and III
5. II and III

1. 9. An activity based costing system, direct material used would typically be classified as a
   1. Unit level cost
   2. Batch level cost
   3. Product sustaining cost
   4. Facility level cost
   5. Matrix level cost

1. 11 Cartwright graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in 100 sheet packages at a cost of $100per package. Management estimates that the cost of placing and receiving a typical order is $15. And the annual cost of carrying a package inventory is $50. Cartwright uses 2,600 packages each year. Production is constant and the lead time to receive an order is a1 week. The reorder point is
   1. 25 packages
   2. 50 packages
   3. 100 packages
   4. 203 packages
   5. 225 packages

1. Cartwright graphics uses a special purpose paper on 80% of its jobs. The paper is purchased in 100 sheet packages at a cost of $100per package. Management estimates that the cost of placing and receiving a typical order is $15. And the annual cost of carrying a package inventory is $50. Cartwright uses 2,600 packages each year. The economic order quantity is approximately
   1. 203 packages
   2. 225 packages
   3. 228 packages
   4. 565 packages
   5. 631 packages