When Automatic Purchase Orders Are Generated, to Help Make Sure

question 21

Multiple Choice

When automatic purchase orders are generated, to help make sure that goods are ordered for products that the company still needs, the company should

• A) have all purchase orders approved by the purchasing manager.
• B) have suppliers automatically replenish the shelves.
• C) ensure that re-order points are monitored.
• D) have receiving reports matched to the purchase order amounts.

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Definitions:

Equivalent Units

A concept used in cost accounting to express the amount of work done by manufacturers in terms of fully completed units.

Materials

Items or supplies used in the production of goods, considered part of the direct costs in manufacturing.

FIFO Method

"First In, First Out," an inventory valuation method that assumes goods are sold in the order they are acquired, impacting the cost of goods sold and inventory value.

Equivalent Units

A term used in process costing to measure the amount of work done on incomplete products, converted into an equivalent number of fully completed units.