With an A-B-C System,an Item That Had a High Demand

question 132

Multiple Choice

With an A-B-C system,an item that had a high demand quantity but a low annual dollar volume would probably be classified as:

• A) A
• B) B
• C) C
• D) A or B
• E) none of the above

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Definitions:

Order Costs

Expenses related to placing and receiving orders for inventory, including costs associated with ordering, shipping, and handling.

Accounts Receivable Period

The common interval before a business secures payments from its customers for products or services rendered on credit.

Operating Cycle

The time period between the acquisition of inventory and the collection of cash from accounts receivable.

Cash Cycle

The amount of time required for a company to turn its inventory and various assets into cash through sales revenue.