Which of the Following Would Cause Average Inventory Holdings to Decrease

question 8

Multiple Choice

Which of the following would cause average inventory holdings to decrease, other things held constant?

• A) Fixed order costs double.
• B) The purchase price of inventory items decreases by 50 percent.
• C) The carrying price of an item decreases (as a percent of purchase price).
• D) The sales forecast is revised downward by 10 percent.
• E) None of the above (all would cause average inventory to increase).

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits distributed.

Mikel Company Bonds

Debt securities issued by Mikel Company to investors, representing loans made by investors to the company.

Purchase

The act of buying goods, services, or assets in exchange for money or its equivalent.

Annual Interest

The total amount of interest to be paid or earned over the course of a year, typically associated with loans or investments.