Allison Has Developed a Set of Procedures for Determining the Amount

question 90

Multiple Choice

Allison has developed a set of procedures for determining the amount of each raw material that she needs to have in inventory if she is to keep her firm's assembly lines operating efficiently.These procedures are commonly referred to by which one of the following terms?

• A)first-in, first-out method
• B)the Baumol model
• C)net working capital planning
• D)economic order procedures
• E)materials requirements planning

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Definitions:

Mixed Cost

A cost that contains both fixed and variable components, changing with the level of activity but not in direct proportion.

Variable Cost

Variable cost refers to expenses that change directly with the level of production or business activity, such as raw materials and labor costs.

Fixed Cost

Expenses that do not change with the level of production or sales activity, such as rent or salaries.

Work in Process-Department X

Inventory representing partially completed goods that are still in the production process within a specific department.