Indicate whether each statement istrue (T) or false (F).
____ 1. Examples of carrying costs of inventory are obsolescence,opportunity cost of investment tied up in inventory, andinspection.
____ 2. The EOQ model does not include quantity discounts lost on inventorypurchases.
____ 3. EOQ minimizes the annual relevant total carrying costs ofinventory.
____ 4. An example of a cost pertaining to inventory that usually isirrelevant to the decision of how much to order is salaries ofstockroom workers.
____ 5. The reorder point decreases if the ordering costs per purchaseorder increase.
____ 6. JIT purchasing should be guided by the EOQ decision model.
____ 7. Adopting JIT purchasing is likely to result in fewer suppliers foreach item and more paperwork.
____ 8. JIT production operates as a push-through system.
____ 9. A key feature of backflush costing is that it tracks manufacturingcosts sequentially.
____ 10. When asingle Inventory Control account is used in backflush costing, thisaccount is restricted solely to direct materials, whether they arein storerooms, in process, or in finished goods.
____ 11. Althoughbackflush costing may not strictly adhere to generally acceptedaccounting principles, the accounting principle of materialityworks in favor of backflush costing when inventories are low.
Indicate whether each statement istrue (T) or false (F).
____ 1. Examples of carrying costs of inventory are obsolescence,opportunity cost of investment tied up in inventory, andinspection.
____ 2. The EOQ model does not include quantity discounts lost on inventorypurchases.
____ 3. EOQ minimizes the annual relevant total carrying costs ofinventory.
____ 4. An example of a cost pertaining to inventory that usually isirrelevant to the decision of how much to order is salaries ofstockroom workers.
____ 5. The reorder point decreases if the ordering costs per purchaseorder increase.
____ 6. JIT purchasing should be guided by the EOQ decision model.
____ 7. Adopting JIT purchasing is likely to result in fewer suppliers foreach item and more paperwork.
____ 8. JIT production operates as a push-through system.
____ 9. A key feature of backflush costing is that it tracks manufacturingcosts sequentially.
____ 10. When asingle Inventory Control account is used in backflush costing, thisaccount is restricted solely to direct materials, whether they arein storerooms, in process, or in finished goods.
____ 11. Althoughbackflush costing may not strictly adhere to generally acceptedaccounting principles, the accounting principle of materialityworks in favor of backflush costing when inventories are low.
