In the Periodic Review Model,the Order Quantity at Each Review

question 48

True/False

In the periodic review model,the order quantity at each review period must be sufficient to cover demand for the review period plus the demand for the following lead time.

---

Definitions:

Unit Product Cost

The calculated cost to produce one unit of a product, including direct materials, labor, and overhead.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, indicating how much contributes to covering fixed costs and generating profit.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a unit of product.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and generate profit.