Which One of the Following Statements About Inventory Control Systems

question 124

Multiple Choice

Which one of the following statements about inventory control systems is best?

• A) Visual systems are intended for use with high- value items like jet engines, that don't experience a steady demand.
• B) The base- stock system is mostly used for inexpensive items since it maximizes cycle inventory costs.
• C) A base- stock system minimizes ordering and setup costs by placing orders more infrequently.
• D) A single- bin system is essentially a P system, with the target inventory and current inventory position established visually.

---

Definitions:

Direct Method

A costing method primarily used in cost accounting that allocates service department costs directly to production departments without any intermediate allocations.

Prepaid Expense

Payments made for goods or services to be received in the future, considered as an asset on the balance sheet until used or consumed.

Accrued Liabilities

Obligations that a company has incurred, for which it has not yet paid cash or issued payment during the accounting period.

Direct Method

An approach in cost accounting used to allocate service department costs directly to producing departments without distributing service costs between service departments.