1. Classify the below listed items as either Ordering Costs or Holding Costs. a.

Question

1. Classify the below listed items as either Ordering Costs or Holding Costs.

a. Costs resulting from theft of products by employees (Ordering Costs or Holding Costs)

b. Costs of receiving department salaries (Ordering Costs or Holding Costs)

c. Costs of obtaining purchase order approval  (Ordering Costs or Holding Costs)

d. Interest related to cost in inventory  (Ordering Costs or Holding Costs)

2. To calculate the reorder point, you need to know all of the following except:

a. the cost of placing an order

b. the rate at which the material will be used.

c. the estimated amount of time between placing and receiving an order

3. Indicate whether the following labor costs (all related to factory assembly workers) would MOST LIKELY be charged to WIP or to MOH.

a. Shift Premiums (WIP or MOH)

b. Piece rate pay (WIP or MOH)

c. Overtime Premium (overtime was due to the requirements of a particular customer order) (WIP or MOH)

d. Makeup guarantees (WIP or MOH)

Explanation / Answer

1.a) Holding costs

B) Ordering cost

C) Ordering cost

D) Holding costs

2. The correct answer is the cost of placing an order

3.

a)WIP

B) WIP

C) MOH

D) MOH

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