Select the Appropriate Type of Cost for Each of the Definitions

question 38

Multiple Choice

Select the appropriate type of cost for each of the definitions below.
-has an increased fixed component at specific intervals

• A)variable
• B)fixed
• C)mixed
• D)step

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Definitions:

Safety Stock

An inventory buffer to prevent stockouts, typically held to account for variability in demand or supply.

EOQ Model

Economic Order Quantity Model; an inventory management formula that determines the optimal order quantity to minimize total inventory costs.

Collection Policy

The guidelines and procedures that a company follows to collect accounts receivables from its customers, including the timeline and actions for overdue payments.

Average Collection Period

The average number of days it takes for a company to receive payments owed by its customers, indicating the efficiency of a company's credit and collection policies.