Use the Information Below to Answer the Following Question(s)

question 75

Multiple Choice

Use the information below to answer the following question(s) :
The materials manager for a billiard ball maker must periodically place orders for resin,one of the raw materials used in producing billiard balls.She knows that manufacturing uses resin at a rate of 50 kilograms each day,and that it costs $.04 per day to carry a kilogram of resin in inventory.She also knows that the order costs for resin are $100 per order,and that the lead time for delivery is four (4) days.Assume 365 days in a year.
-At what point should resin be reordered?

• A)0 kilograms remaining
• B)50 kilograms remaining
• C)200 kilograms remaining
• D)400 kilograms remaining

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Definitions:

Unit Product Cost

The total cost (both direct and indirect) to produce a single unit of product, often used to set selling prices and assess profitability.

Absorption Costing

A method of costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - as part of the cost of a product.

Variable Costing

A costing method that includes only variable production costs (direct material, direct labor, and variable manufacturing overhead) in product costs.

Net Operating Income

A company's total earnings from its operations, excluding non-operating income and expenses, interest, and taxes.