Which of the Following Statements Is True

question 102

Multiple Choice

Which of the following statements is true?

• A) The reorder point is the point at which the amount of inventory on hand equals the amount needed to cover sales during the lead time.
• B) The reorder point is the minimum level of inventory allowed during a particular period.
• C) The safety stock is the amount of stock that must be on hand to cover sales during lead time.
• D) The safety stock is the minimum level of inventory that must remain on hand.
• E) The safety stock is the minimum level of inventory that must remain at the customers.

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Definitions:

Job Cost Sheet

A job cost sheet is a document that records the costs associated with a specific job or batch, tracking materials, labor, and overhead.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on a particular activity base.

Machine-hours

A measure of the time that machines are operating, often used as a basis for allocating manufacturing overhead costs.

Direct Materials Cost

The cost of raw materials and components that are directly used in the production of a product.