Which of the Following Statements Is True with Regard to EPQ

question 19

Multiple Choice

Which of the following statements is true with regard to EPQ and EOQ?

• A)The economic production quantity (EPQ)model was developed in the 1960s.
• B)In the EOQ model,the assumption is that the company will produce the items.
• C)The EPQ model assumes that the company will order the items from an outside vendor.
• D)The EPQ model is an extension of the EOQ model.

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Definitions:

Absorption Costing

An accounting method that assigns all manufacturing costs, both variable and fixed, to products, thereby impacting the inventory valuation on the balance sheet.

Net Operating Income

The profit a company makes from its operations, calculated as total revenue minus operating expenses, excluding taxes and interest.

Variable Costing

An accounting method that only includes variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.

Absorption Costing

A product costing technique that adds up all manufacturing expenses — direct materials, direct labor, variable, and fixed overheads — into the comprehensive cost of the product.