Snyder Industries Uses 100,000 Widgets Each Year

question 157

Multiple Choice

Snyder Industries uses 100,000 widgets each year. If Snyder decides to place more orders each year, ordering fewer widgets each time, Snyder will be carrying ______ inventory on average and the risk of running out of inventory will ______.

• A) more; fall
• B) more; rise
• C) less; fall
• D) less; rise

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Definitions:

Specific Identification

An inventory costing method where the actual cost of specific units of inventory is assigned to those units, useful for items that are uniquely identifiable and have significantly different costs.

Low-Cost Units

Units of production that are manufactured or acquired at relatively low costs, often to manage expenses and improve profitability.

Inventory Valuation

Inventory valuation is a process of determining the monetary value of a company's inventory at the end of a reporting period, based on the cost or market value.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.