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Jacket
Management Accounting
Willie Seal, University of Essex, UK
Ray Garrison, Brigham Young University, Provo, Utah, USA
Eric Noreen, INSEAD, France
Stock management: EOQ, JIT, ERP and E-commerce

Self-test Questions



1

The EOQ formula is:

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The costs of placing an order are as follows:
Single order cost = £6
Stock cost per unit per year £1
Annual quantity used in units £120,000
The EOQ is:


(Learning Objective 1 Ch 18)
A)4
B)1,200
C)600
D)13.33
2

One of the following is not an argument for JIT
(Learning Objective 2 Ch 18)
A)The cost of carrying stock is greater than allowed for in normal EOQ calculations
B)Concentrating on a few high quality suppliers will reduce order costs
C)JIT increases the EOQ
D)The company should order more frequently
3

One of the following is not true of JIT
(Learning Objective 3 Ch 18)
A)JIT results in a push rather than a pull system
B)Traditional Management Accounting systems may not be compatible with JIT
C)To properly implement JIT, plant layout must normally improve
D)Good flow lines may be U-shaped
4

One of the following is not an advantage of JIT
(Learning Objective 3 Ch 18)
A)Less funds are tied up in stock
B)Additional areas are needed to administer JIT
C)Throughput time is reduced
D)Defect rates are reduced
5

One of the following is not true of ERP
(Learning Objective 4 Ch 18)
A)It is based on value chain thinking
B)Integrated client serve technology features
C)A lack of flexibility may result when operated in different countries
D)Data has normally to be entered several times
6

One of the following is not true the contribution of ERP models
(Learning Objective 5 Ch 18)
A)A more learning, improving culture is generated
B)Many of the returns are “hard returns” of reduced head count
C)Many of the gains are “back door” gains such as agreeing common data
D)Early ERP involved automating existing systems
7

One of the following is not true regarding e-business
(Learning Objective 6 Ch 18)
A)Many of the breakthroughs relied on old technology
B)As companies become more virtual there are new challenges for management accountants
C)E-commerce expansion may result in the erosion of high street property values
D)Traditional business plans have nothing to offer internet start-ups






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