Average Inventory in the EOQ Model Is Defined as

question 28

Multiple Choice

Average inventory in the EOQ model is defined as

• A)The order quantity divided by the number of inventory cycles per year
• B)Annual usage divided by the number of inventory cycles per year
• C)One-half the order quantity
• D)One-half the annual usage

---

Definitions:

Quantity Variance

The difference between the expected and actual quantity of materials used in production, reflecting efficiency in material usage.

Direct Materials

The raw materials directly used in the manufacturing of a product.

Budgeted Operating Income

The anticipated revenue from operations minus the expected operating expenses for a certain period, typically before financial expenses and taxes.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, often used in variance analysis.