Indicate whether each statement is true (T) or false (F).

____ 1. Examples of carrying costs of inventory are obsolescence, opportunity cost of investment tied up in inventory, and inspection.

____ 2. The EOQ model does not include quantity discounts lost on inventory purchases.

____ 3. EOQ minimizes the annual relevant total carrying costs of inventory.

____ 4. An example of a cost pertaining to inventory that usually is irrelevant to the decision of how much to order is salaries of stockroom workers.

____ 5. The reorder point decreases if the ordering costs per purchase order increase.

____ 6. JIT purchasing should be guided by the EOQ decision model.

____ 7. Adopting JIT purchasing is likely to result in fewer suppliers for each item and more paperwork.

____ 8. JIT production operates as a push-through system.

____ 9. A key feature of backflush costing is that it tracks manufacturing costs sequentially.

____ 10. When a single Inventory Control account is used in backflush costing, this account is restricted solely to direct materials, whether they are in storerooms, in process, or in finished goods.

____ 11. Although backflush costing may not strictly adhere to generally accepted accounting principles, the accounting principle of materiality works in favor of backflush costing when inventories are low.