The Economic Order Quantity

question 79

Multiple Choice

The economic order quantity:

• A) is the order size that minimizes the order costs.
• B) is independent of forecast sales.
• C) is based on sales, carrying costs, and order costs.
• D) increases as cost per order decreases.

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Definitions:

Merchandise

Goods that are bought and sold in the course of business, usually in a retail environment.

Delivery Expense

The costs incurred by a business to transport its goods to the customer, often treated as a direct or indirect expense depending on the nature of the expense allocation.

Expense Account

An accounting account that tracks money spent or costs incurred in a business entity's operation.

Perpetual Inventory System

An inventory management accounting method that instantly documents transactions of buying or selling inventory via computerized point-of-sale systems and enterprise asset management applications.