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

question 73

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 $1,100.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:

Income Summary

A temporary account used in accounting to transfer revenues and expenses, summarizing the net income or loss for a period before transferring the balance to retained earnings.

Owner's Capital

The amount of equity in a company that is directly attributable to the owner(s), representing their stake in the company’s assets after liabilities have been subtracted.

Revenue

Income derived from the core business activities of a company, specifically through selling products or services.

Net Income

The residual financial benefit a company holds after reducing total income by all expenditures and tax payments.