Instructions:Indicate your answer in the Answers column by writing a T for True or an F for False.

Answers

1. Effective control of materials involves limiting the access to stored materials, segregating the duties of employees who handle materials and materials reports, and establishing an accurate recording system for materials purchases and issues.......................................... _________

2. The assignment of different personnel to the functions of purchasing, receiving, storage, use, and recording of materials reduces the danger of misappropriation. _________

3. The time at which an item should be ordered usually is referred to as the economic order quantity............................................................................................................ _________

4. The safety stock protects against inaccurate estimates of usage, lead-time variances, and other unforeseen events............................................................................... _________

5. Annual order costs increase when order size increases while annual carrying costs decrease with increases in order size......................................................................... _________

6. When no safety stock is present, the EOQ is usually at the point where total ordering costs exactly equal total carrying costs.................................................................... _________

7. The responsibility of supervising all functions relating to an incoming shipment of materials usually is assigned to the receiving clerk............................................ _________

8. The purchase requisition usually originates with the purchasing agent. _________

9. The materials shipped by the vendor should arrive at the factory receiving dock prior to the receipt of the vendors invoice....................................................................... _________

10. When goods are returned to the vendor the buyer prepares a debit memorandum. _________

11. Materials is a control account supported by a subsidiary materials ledger. _________

12. When materials receipts and issues are posted to the materials ledger accounts, the balance is extended after each entry.................................................................... _________

13. The prices paid for the most recent purchases are used to cost the ending inventory when the FIFO method is used.................................................................................... _________

14. If rework to correct defective units resulted from the exacting specifications of the order, Factory Overhead should be debited for the cost of the rework...................... _________

15. If materials on hand are less than the control account balance, Factory Overhead should be debited and Materials credited for the difference............................................ _________

16. ............ A just-in-time inventory system is a push inventory system _________

17. A basic requirement of the moving average method is that an average unit price must be computed every time a new lot of materials is received...................................... _________

18. .. The flow of materials dictates the inventory cost flow method used _________

19. .... Backflush costing is the accounting system used with a JIT system _________

20. Revenue from scrap sales may be reported as other income or as a reduction in manufacturing costs................................................................................................... _________