Which of the Following Is True of the EOQ Model?Note

question 21

Multiple Choice

Which of the following is true of the EOQ model?Note that the optimal order quantity, Q, will be called EOQ.

• A) if the annual sales, in units, increases by 20%, then eoq will increase by 20%.
• B) if the average inventory increases by 20%, then the total carrying costs will increase by 20%.
• C) if the average inventory increases by 20% the total order costs will increase by 20%.
• D) the eoc is the same for all companies.
• E) if the fixed per order cost increases by 20%, then eoq will increase by 20%.

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Definitions:

End-Of-Period Spreadsheet

A document used to gather all account balances at the end of an accounting period to prepare financial statements.

Prepaid Insurance

An asset account that represents insurance payments made in advance for coverage extending over future periods.

Unearned Revenue

Funds paid to a company for products or services that are still to be provided or executed.

Income Statement

A financial statement that displays a company's revenues, expenses, and net income over a specific period, demonstrating the financial performance of the business.