Individual A, money related director of company W, has been inquired by the firm’s CEO, individual F, to assess the company’s stock control techniques and to lead a dialog of the subject with the senior executives. Individual A plans to utilize as a case one of company W’s “big ticket” things, a customized computer a microchip that the firm employments in its portable workstation computers. Each chip costs company W $200, and it must moreover pay its supplier a $1,000 setup charge on each arranges; the minimum the arrange measure is 250 units. Webster’s yearly usage of the figure is 5,000 units, and the yearly carrying fetched of this thing is assessed to be 20% of the normal inventory value. Individual A plans to start her session with the senior executives by looking into a few fundamental stock concepts, after which she will apply the EOQ demonstrate to company W’s microchip stock. To determine: The effect would this have on total inventory costs, the new reorder point, and protection does the safety stock provide if usage increases, or if delivery is delayed.

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Chapter 23, Problem 7MC

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Individual A, money related director of company W, has been inquired by the firm’s CEO, individual F, to assess the company’s stock control techniques and to lead a dialog of the subject with the senior executives. Individual A plans to utilize as a case one of company W’s “big ticket” things, a customized computer a microchip that the firm employments in its portable workstation computers. Each chip costs company W $200, and it must moreover pay its supplier a $1,000 setup charge on each arranges; the minimum the arrange measure is 250 units. Webster’s yearly usage of the figure is 5,000 units, and the yearly carrying fetched of this thing is assessed to be 20% of the normal inventory value. Individual A plans to start her session with the senior executives by looking into a few fundamental stock concepts, after which she will apply the EOQ demonstrate to company W’s microchip stock.

To determine: The effect would this have on total inventory costs, the new reorder point, and protection does the safety stock provide if usage increases, or if delivery is delayed.

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Of course, there is uncertainty in Webster’s usagerate as well as in delivery times, so the companymust carry a safety stock to avoid running out ofchips and having to halt production. If a 200-unitsafety stock is carried, what effect would this haveon total inventory costs? What is the new reorderpoint? What protection does the safety stock provide if usage increases or if delivery is delayed?

Here are some statements about production to stock: Production to stock is justified when the plant has excess production capacity. Inventory production is desirable to avoid wasting resources. Inventory production may be justified when the manufacturer is facing sharp fluctuations in demand for its products. Inventory production may lead to an increase in the accounting profit that will be reported in the near future. Which of the above statements is true / correct? One answer must be chosen: Only statements 3 and 4 are correct. Just say 2. Just say 1. Just say 3. Just say 4.

ts) An auditor recently asked an accounting manager to perform a LCM test on a batch of inventory. Since the manager would prefer to avoid the cost of a LCM test, what GAAP argument could she use to avoid performing the test? O The cost of the test would not outweigh the benefit of the result. O Why don't you perform the test? That's what we are paying you for. O I have no reason to believe future value has dropped below the historical cost. h O The recorded cost accurately represents the costs when the inventory was produced.