Which of the Following Statements About Quantity Discounts Is FALSE

question 151

Multiple Choice

Which of the following statements about quantity discounts is FALSE?

• A) The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs.
• B) In inventory management, item cost becomes relevant to order quantity decisions when a quantity discount is available.
• C) If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule.
• D) The larger the annual demand, the less attractive a discount schedule will be.
• E) The smaller the ordering cost, the less attractive a discount schedule will be.

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Definitions:

Direct Method

An approach to calculating cash flows from operating activities that involves listing all major operating cash receipts and payments.

Cafeteria Department

A division within an organization that manages the provision of food services to employees.

Number of Employees

The total count of individuals employed by a business at any given time.

Reciprocal Services Method

An accounting method used to allocate costs among different departments within an organization that provide services to each other.