The Economic Order Quantity for Inventory Is Higher for an Organization

question 129

Multiple Choice

The economic order quantity for inventory is higher for an organization that has:

• A) Lower annual unit sales.
• B) Higher fixed inventory ordering costs.
• C) Higher annual carrying costs as a percentage of inventory value.
• D) A higher purchase price per unit of inventory.

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Definitions:

Common-size Balance Sheet

A financial statement displaying all line items as a percentage of total assets, facilitating comparison across companies or periods.

Total Assets

The sum of all assets owned by a business, including cash, inventory, property, and equipment, reflecting the total resources of an entity.

Comparative Financial Statements

Financial statements that present the financial position and performance of a company over multiple periods, facilitating trend analysis and comparison.

Common-size Percent

A financial analysis tool that expresses each line item on a financial statement as a percentage of a base amount, facilitating comparison across different periods or companies.