The Economic Order Quantity Ignores

question 46

Multiple Choice

The economic order quantity ignores:

• A)purchasing costs
• B)relevant ordering costs
• C)stockout costs
• D)Both A and C are correct.

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Definitions:

Purchases Account

A general ledger account in which the purchases of goods intended for resale are recorded.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting operating expenses, interest, and taxes.

Overall Profitability

An assessment of a company's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time.

Company

A legal entity formed by a group of individuals to engage in and operate a business—commercial or industrial—enterprise.