Cycle Inventory Exists Because Producing or Purchasing in Large Lots

question 62

Multiple Choice

Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to

• A) exploit economies of scale and raise cost.
• B) exploit economies of scale and lower cost.
• C) exploit customers and lower cost.
• D) exploit customers and raise cost.
• E) none of the above

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Definitions:

Terms 1/10, n/30

A payment term indicating that a buyer can take a 1% discount on the invoice amount if payment is made within 10 days, otherwise the full (net) amount is due in 30 days.

Inventory Sold

The quantity of products or merchandise that a company has sold to its customers; these goods have been moved out of inventory and recognized as revenue.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made periodically, typically at the end of an accounting period, rather than after each transaction.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting operating expenses, interest, and taxes.