Under a Periodic Review System, Enough Inventory Must Be Carried

question 79

True/False

Under a periodic review system, enough inventory must be carried to protect against stockout for the replenishment lead time plus the review period.

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Definitions:

Relevant Range

The relevant range refers to the range of activity or volume over which the assumptions about variable and fixed cost behaviors hold true for management decision-making purposes.

Direct Materials

Raw materials that can be directly traced to the manufacturing of a product and are a part of the final product.

Variable Costs

Variable costs are expenses that change in proportion to the activity of a business, such as costs for raw materials or production.

Cost-volume-profit Analysis

A financial accounting technique that calculates how variations in costs and sales volume impact a firm's profitability.