Carrying Cost Is a Function of Order Size; the Larger

question 17

True/False

Carrying cost is a function of order size; the larger the order, the higher the inventory carrying cost.

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Definitions:

Budget Variance

The financial difference between the budgeted amount and the actual amount spent or received.

Standard Cost System

An accounting method that assigns preset costs to products and services, which are then compared to actual costs incurred.

Predetermined Overhead Rate

A calculated rate designed to assign estimated indirect manufacturing costs to products or services, based on a planned activity level.

Fixed Component

A portion of total costs that does not change with the level of activity or production volume, such as rent or salaries.