CHAPTER 2ACCOUNTING FOR MATERIALS Name MULTIPLE CHOICE 1. An effective cost cont
ID: 2459354 • Letter: C
Question
CHAPTER 2ACCOUNTING FOR MATERIALS Name MULTIPLE CHOICE 1. An effective cost control system should include An established plan of objectives and goals to be achieved b. Regular reports showing the difference between goals and actual performance e. Specific assignement of duties and responsibilities d. All of these are correct. 2. To effectively control materials, a business must maintaie a. Limited access. b. Combination of duties c. Safety stock. d. None of these are correct. 3. Janet is the purchasing agent at Frameco Maufacturing. Her duties include vendor selection and ordering materials. Due to a recent economic downturn and resulting cut backs, Janet has been purchase order. This is an example of a. unlimited aocess to materials b. independence of assigned functions c. misappropriation of assets. d. a lack of segregation of duties. 4 Marley Company hired a consultant to help improve its operations. The consultant's report stated that Marley's inventory levels are excessive and cited several negative consequences to Marley as a result. Which of the following was not cited in the report? a. Possible other uses for working capital now tied up in inventory b. Production stoppages due to parts not being available c. Higher property taxes and insurance costs d. Large quantities of obsolete materials 5. The data used to calculate the order point include all of the following except a. the costs of placing an order. b. the rate at which the material will be used. the estimated time interval between the placement and receipt of an order c. d. the estimated minimum level of inventory needed to protect against stockouts. Sully Company uses 3,000 yards of canvas each day to make tents. It usually takes ten days from th time Sully orders the material to when it is received. If Sully's desired safety stock is 12,000 yards, what is Sully's order point? a. 12,000 yards b. 21,000 yards c. 30,000 yards 6. d. 42,000 yardsExplanation / Answer
1 ) All of the above are correct
For effective cost control system proper planning and goal are required and proper method or way should be there to measure the performance & apart from this proper delegation of work also very necessary to get the job done .
2 ) Safety Stock
Safety stock is the stock held by a company in excess of its requirement for the lead time..in otherwords it is an Emergency stock .so for effective material control system safty stock is necessary
3 ) D ) This is an example lack of segregation of duties .
"Segregation of duties means of having more than one person required to complete a task. when internal control demands
4 ) B ) production stopage due to parts not being available
There is less possibilty of production stopage due to parts not available beacuse marley comapny do have excessive material so .
5 )B ) Rate at which material wll be used
6 )d ) 42000
(Average daily usage rate x Lead time) + Safety stock
(3000 * 10) + 12000= 42000