Mia, a Manager at Best Buy, Increases the Order Size

question 9

Multiple Choice

Mia, a manager at Best Buy, increases the order size for a product that the company sells, which will ________.

• A)increase both ordering costs and carrying costs
• B)increase ordering costs and decrease carrying costs
• C)decrease both ordering costs and carrying costs
• D)decrease ordering costs and increase carrying costs

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Definitions:

Opportunity Cost

The cost of choosing one option over another, representing the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Stand-Alone Principle

A method of evaluating a project or investment by analyzing its viability and potential profitability as if it were the only project the company is undertaking.

Incremental Costs

Additional costs that a company incurs when increasing production or undertaking new projects.

Pro Forma Financial Statements

Financial reports that project the future financial position of a company, based on current data and assumptions.