Carter Company Orders 250 Units at a Time,and Places 15

question 44

Multiple Choice

Carter Company orders 250 units at a time,and places 15 orders per year.Total ordering cost is $1,100 and total carrying cost is $1,750.Which of the following statements is true?

• A)the economic order quantity (EOQ)is 250
• B)the economic order quantity (EOQ)is more than 250
• C)the economic order quantity (EOQ)is less than 250
• D)total inventory-related cost is lower than it would be at the economic order quantity (EOQ)
• E)none of these

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Definitions:

Interest Method

A financial calculation used to determine the amount of interest due or earned over a specific period of time, considering factors like principal, rate, and time.

Annuity

An investment vehicle that provides a consistent series of payments to a person, mainly serving as a source of income for those who have retired.

Compound Interest

Interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

Present Value

The assessed present-day value of money to be received in the future or a pattern of cash inflows, factoring in an established rate of return.