Economic Order Quantity

question 80

Multiple Choice

Economic order quantity

• A)the costs of not having a product available when demanded by a customer
• B)the costs of carrying inventory
• C)approach that maintains goods should be pulled through the system by present demand
• D)the number of units in the order quantity that minimizes the total cost
• E)the costs of placing and receiving an order

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Definitions:

Product Cost

The total cost incurred to manufacture a product or to provide a service, including direct materials, labor, and overhead expenses.

Period Cost

Expenses that are not directly tied to the production process and are expensed in the period they are incurred, such as selling and administrative expenses.

Frosting

A sweet, often creamy glaze made of sugar with liquid (such as water or milk) and sometimes flavored, used to coat or decorate baked goods.

Prime Costs

The combined costs of direct materials and direct labor that are directly involved in the manufacturing of a product.