The Practice of Purchasing Items in Large Quantities and Requesting

question 183

Multiple Choice

The practice of purchasing items in large quantities and requesting that shipments be delivered directly to customers is referred to as:

• A) drop shipping.
• B) cross-docking.
• C) breaking bulk.
• D) freight equalization.

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Definitions:

FIFO

"First In, First Out," an accounting method for valuing inventory where the first items placed in inventory are the first sold.

Current Costs

The costs that would have to be incurred to replace or reproduce an asset in the current period, under current market conditions.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Net Income

The total earnings of a company after accounting for all expenses, taxes, and additional income streams, representing the company’s profit.