If the Order Quantity Is 1,000 Units,and the Holding Costs

question 89

Multiple Choice

If the order quantity is 1,000 units,and the holding costs are $5 a unit per year,then ______.

• A)the average inventory level will be 500
• B)the total annual holding cost would be $5,000
• C)the average inventory level will be 2,500
• D)the total annual holding cost would be $500

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Definitions:

Average Cost

The total cost divided by the quantity produced, often used to assess efficiency or profitability.

Standard Meals

Refers to set menu options in a food service establishment that are regularly available and usually priced at a fixed rate.

Producing

The act of creating, manufacturing, or generating goods or services.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.