Inventory Management Multiple Choice Questions with Answers(PDF)

Inventory Management,Account Coast Multiple Choice Questions with Answers(PDF)


1.If demand in units is 18000, relevant ordering cost for each year is $150 and an order quantity is 1500 then annual relevant ordering cost would be
Answer D

2.If relevant opportunity cost of capital is $2950 and relevant carrying cost of inventory is $6700 then relevant incremental cost will be
Answer C

3.Profit forgone by capital investment in inventory rather than investment of capital to somewhere else is classified as

a)relevant purchase order costs
b)relevant inventory carrying costs
c)irrelevant inventory carrying costs
d)relevant opportunity cost of capital
Answer D

4. An example of shrinkage costs includes
a)incoming freight
b)storage costs
D)clerical errors
Answer D

5.If relevant incremental costs are $5000 and relevant opportunity cost of invested capital is $2500 then relevant inventory carrying costs would be

a) $7,500
b) $7,000
c) $6,500
d) $6,000
Answer A

6.Costing system which omits some of journal entries in accounting system is known as

A)ain-time costing
b)trigger costing
c)back flush costing
d)lead time costing
Answer C

7.Decision model to calculate optimal quantity of inventory to be ordered is called

a)efficient order quantity
b)economic order quantity
c)rational order quantity
d)optimized order quantity
Answer B

8.Stage in manufacturing cycle at which journal entries are made in system of accountancy is known as

a)chaining point
b)recording point
c)lead point
d)trigger point
Answer D

9.If required rate of return is 12% and per unit cost of units purchased is $35 then relevant opportunity cost of capital will be

Answer C

10. Method of costing that supports creation of value for customer by accounting whole value stream rather than individual departments or products is classified as

a)economic accounting

b)back-flush accounting

c)lean accounting

d)lead accounting
Answer C

11.If purchase order lead time is 35 minutes and number of units sold per time is 400 units then reorder point will be

a)14000 units
b)14500 units
c)15000 units
d)15500 units
Answer A

12.An example of purchasing costs include

a)incoming freight
B)storage costs
Answer C

13.If an average inventory is 2000 units and annual relevant carrying cost of each unit is $5 then annual relevant carrying cost will be

Answer A

14.If demand of one year is 25000 units, relevant ordering cost for each purchase order is $210 and carrying cost of one unit of stock is $25 then economic order quantity is

a)678 packages
b)648 packages
c)658 packages
d)668 packages
Answer B

15.Cost of product failure, error prevention and appraisals are classified as

a)stocking costs
b.stock-out costs
c)costs of quality
D)rinkage costs
Answer C

16. Activities related to coordinating, controlling and planning activities of flow of inventory are classified as

a)decisional management
b)throughput management
c)inventory management
d)manufacturing management
Answer C

17.Which of the following is true for Inventory control?

a)Economic order quantity has minimum total cost per order
b)Inventory carrying costs increases with quantity per order
c)Ordering cost decreases with lo size
d)All of the above

18.The time period between placing an order its receipt in stock is known as

a)Lead time
b)Carrying time
c)Shortage time
d)Over time

19.Re-ordering level is calculated as

a)Maximum consumption rate x Maximum re-order period
b)Minimum consumption rate x Minimum re-order period
c)Maximum consumption rate x Minimum re-order period
d)Minimum consumption rate x Maximum re-order period

20.Average stock level can be calculated as

a)Minimum stock level + ½ of Re-order level
b)Maximum stock level + ½ of Re-order level
c)Minimum stock level + 1/3 of Re-order level
d)Maximum stock level + 1/3 of Re-order level





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