Question

In: Accounting

7. The costs of carrying inventory include all of the following except: * a- Ordering costs....

7. The costs of carrying inventory include all of the following except: *

a- Ordering costs.

b- Cost of warehouse space.

c- Insurance and handling costs.

d- Interest on funds tied up in inventory.

e- None of the above.

8. Once the break-even point is reached: *

a- The contribution margin ratio begins to decrease.

b- The variable expenses will remain constant in total.

c- The total contribution margin changes from negative to positive.

d- The net operating income will increase by the unit contribution margin for each additional item sold.

e- None of the above.

9. Allocated common fixed costs: *

a- Are always incremental costs.

b- Can make a product line appear to be unprofitable.

c- Are always relevant in decisions involving dropping a product line.

d- All of the above.

e- None of the above.

10. If Company C has a higher degree of operating leverage than Company D, then: *

a- Company C is less risky.

b- Company C is more profitable.

c- Company C has higher variable expenses.

d- Company C’s profits are more sensitive to percentage changes in sales.

e- None of the above.

Solutions

Expert Solution

7. a. Ordering costs

8. d. The net operating income will increase by the unit contribution margin for each additional items sold

9. b. Can make a product line appear to be unprofitable.

10. d. Company C'S profits are more sensitive to percentage changes in sales.

Explanation:

7. The cost of carrying inventory includes the Cost of warehouse space, insurance and handling cost, Interest on funds tied up in Inventory.

8. Variable expenses cost per unit remains constant but cost will change. The contribution margin ratio will increase . Total contribution margin will change.

9. Allocation of common fixed costs can make a product line appear to be unprofitable where in fact the line may be profitable.

10. Higher degree of operating leverage provides the the company has a high proportion of fixed operating costs compared to its variable operating costs. so comany c's profits are more sensitive to percentage change in sales.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

7. The costs of carrying inventory include all of the following except:
    7. The costs of carrying inventory include all of the following except: a)Ordering costs. b)Cost of warehouse space. c)Insurance and handling costs. d)Interest on funds tied up in inventory. e)None of the above.   8. Once the break-even point is reached: a)The contribution margin ratio begins to decrease. b)The variable expenses will remain constant in total. c)The total contribution margin changes from negative to positive. d)The net operating income will increase by the unit contribution margin for each...
1- Inventory costs include all of these: purchase costs, holding or carrying costs, and ordering costs....
1- Inventory costs include all of these: purchase costs, holding or carrying costs, and ordering costs. T. True F. False 2- The Economic Order Quantity (EOQ) model tells us........ A. how much to order B. which are higher - holding or ordering costs C. how to use price discounts D. when to order 3- When tracking or counting inventory items, we should focus on which items most? A. A-items B. B-items C. C-items D. D-tems 4- The Economic Order Quantity...
1- Inventory costs include all of these: purchase costs, holding or carrying costs, and ordering costs....
1- Inventory costs include all of these: purchase costs, holding or carrying costs, and ordering costs. T. True F. False 2- The Economic Order Quantity (EOQ) model tells us........ A. how much to order B. which are higher - holding or ordering costs C. how to use price discounts D. when to order 3- When tracking or counting inventory items, we should focus on which items most? A. A-items B. B-items C. C-items D. D-tems 4- The Economic Order Quantity...
List and describe the types of carrying costs and ordering costs?
List and describe the types of carrying costs and ordering costs?
In inventory management, the requirement of cycle counting include all of the following EXCEPT a) Closing...
In inventory management, the requirement of cycle counting include all of the following EXCEPT a) Closing the facility to ensure accurate inventory counts b) Reconciling inventory counts with inventory records c) Dividing inventory into classes d) Counting the inventory frequently Justify your answer 2)In inventory management, the requirement of cycle counting include all of the following EXCEPT a) Closing the facility to ensure accurate inventory counts b) Reconciling inventory counts with inventory records c) Dividing inventory into classes d) Counting...
Six categories of costs associated with inventories are purchasing costs, ordering costs, carrying costs, stock out...
Six categories of costs associated with inventories are purchasing costs, ordering costs, carrying costs, stock out costs, quality costs, and shrinkage. Assume you are seasoned manager training new employees about the importance of inventory management. In 200 words or more, describe at least two of these inventory costs. Include specific examples in order to effectively explain these concepts.
Common examples of variable costs include all of the following except: insurance on factory, direct materials,...
Common examples of variable costs include all of the following except: insurance on factory, direct materials, direct labor, any cost that changes in proportion to the changes in the leve of activity?
An annual demand for an item is 500 units, ordering cost is 8 $, inventory carrying...
An annual demand for an item is 500 units, ordering cost is 8 $, inventory carrying interest is 20% of the purchase price per year. Purchase prices are as follows as proposed by the vendor/supplier; where the value of unit cost=10 without any discount? Discount 0% 000≤Q<300    Discount 2% 300≤Q<450 Discount 3% 450≤Q
An annual demand for an item is 500 units, ordering cost is 8 $, inventory carrying...
An annual demand for an item is 500 units, ordering cost is 8 $, inventory carrying interest is 20% of the purchase price per year. Purchase prices are as follows as proposed by the vendor/supplier; where the value of unit cost=10 without any discount? Discount 0% 000≤Q<300    Discount 2% 300≤Q<450 Discount 3% 450≤Q a) for inventory model with no discount====================================================================== a1) The economic order quantity = [EOQ] units a2) The total ordering costs = [TOC] $ a3) The total...
Which of the following generates pressure to increase inventories? A) inventory holding costs B) ordering costs...
Which of the following generates pressure to increase inventories? A) inventory holding costs B) ordering costs C) storage and handling costs D) taxes and insurance
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT