Which of the Following Statements Is True with Regard to the Order

question 34

Multiple Choice

Which of the following statements is true with regard to the order quantity?

• A)If the order quantity in each order is large,then fewer orders will be placed,which will result in lower annual holding costs and annual ordering costs.
• B)If the order quantity in each order is small,then more orders will be placed,which will result in lower annual holding costs but higher annual ordering costs.
• C)If the order quantity in each order is large,then fewer orders will be placed,which will result in higher annual ordering costs and annual holding costs.
• D)If the order quantity in each order is small,the fewer orders will be placed,which will result in lower annual ordering costs but higher holding costs.

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Definitions:

Straight-Line Method

A depreciation technique that allocates an equal amount of depreciation each year over the useful life of the asset.

Semiannual Amortization

The process of gradually writing off the initial cost of an asset over a period, with adjustments made twice a year.

Amortization

The gradual reduction of a debt over a period of time through regular payments, which cover interest and principal.

Interest Expense

The cost incurred by an entity for borrowed funds, typically noted on the income statement as a non-operating expense.