To remove the effect of seasonal variation from a time series, original data should be:
Answer(s): D
Seasonal variations are common in many businesses. To remove the effect of seasonal variation from a time series, the original data with the four trends) is divided by the seasonal norm.
Sales representatives for a manufacturing company are reimbursed for 100 percent of their cellular telephone bills. Cellular telephone costs vary significantly from representative to representative and from month to month, complicating the budgeting and forecasting processes. Management has requested that the internal auditors develop a method for controlling these costs.Which of the following would most appropriately be included in the scope of the consulting project?
Answer(s): C
A business process review BPR) assesses the performance of administrative, financial, and other processes, such as those within the procurement and payables functions. BPR considers process effectiveness and efficiency, including the presence of appropriate controls, to mitigate business risk. It seeks to achieve improvements in such critical measures of performance as cost, quality, service, speed, and customer satisfaction. Because the objective is to control cellular phone costs, BPR is the appropriate tool.
The order costs associated with inventory management include:
Order costs include purchasing costs, shipping costs, setup costs for a production run, and quantity discounts lost.
The carrying costs associated with inventory management include:
Answer(s): B
Carrying costs include storage costs, handling costs, insurance costs, interest on capital invested, and obsolescence. Candman Company is a wholesale distributor of candy. The company leases space in a public warehouse and is charged according to the square feet occupied. Candman has decided to employ the economic order quantity 0Q) method to determine the optimum number of cases of candy to order. The company placed 2,400 orders last year. Data for the high-activity month, the low-activity month, and the year for the purchasing and warehouse operations appear in the next column. The annual charges for the warehouse totaled US $12,750 last year. In addition, the annual insurance and property taxes on the candy stored in the warehouse amounted to US $1,500 and US $2,250, respectively.The average monthly inventory last year was US $75,000.
What is the incremental cost of placing an order that would be used in the EOO model?
The incremental cost of additional orders equals the variable costs incurred in purchasing and receiving inventory but not costs associated with shipping). Using the high-low method of analysis, these variable costs can be computed by determining the apparent variable costs for the two given levels of activity. For 160 orders, the relevant costs with a variable element include purchasing clerks, US $1,750: supplies, US $400, and receiving clerks, US $2,200.The total is US $4,350. For 100 orders, these costs are US $1,250, US $260, and US $1,700, respectively, for a total of US $3,210. As the number of orders increased by 60, the costs increased by US $1 .140. Consequently, the variable or incremental costs per order must have been US $19 $1 .140 - 60 orders). Candman Company is a wholesale distributor of candy. The company leases space in a public warehouse and is charged according to the square feet occupied. Candman has decided to employ the economic order quantity 0Q) method to determine the optimum number of cases of candy to order. The company placed 2,400 orders last year. Data for the high-activity month, the low-activity month, and the year for the purchasing and warehouse operations appear in the next column. The annual charges for the warehouse totaled US $12,750 last year. In addition, the annual insurance and property taxes on the candy stored in the warehouse amounted to US $1,500 and US $2,250, respectively. The average monthly inventory last year was US $75,000.
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