A Firm Has the Following Gross Requirements for Item F

question 11

Multiple Choice

A firm has the following gross requirements for Item F.If ordering costs are $60 per order and carrying costs are $0.50 per period. If EOQ lot sizing is used to set the minimum order quantity,then the planned order releases would be

• A)40 in period 1 and 0 in period 3.
• B)0 in period 2 and 80 in period 3.
• C)120 in period 2 and 120 in period 3.
• D)100 in period 2 and 100 in period 3.

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Definitions:

Composite Units

A measurement or costing method that combines different elements or articles to determine a standard unit rate or cost.

Sales Mix

The proportion of different products or services that a company sells, reflecting the variety and quantities sold.

Fixed Costs

Expenses that do not change in proportion to the level of activity or production, such as rent, salaries, and insurance premiums.

Contribution Margin

The amount by which sales revenue exceeds variable costs, helpful in determining the profitability of individual products or services.