Which of the Following Statements Is NOT True of Economic

question 44

Multiple Choice

Which of the following statements is NOT true of economic order quantity (EOQ) ?

• A) The economic order quantity (EOQ) mathematically determines the minimum total inventory cost.
• B) The EOQ ignores inventory reorder costs and inventory carrying costs.
• C) The optimal order size is determined by the EOQ model.
• D) The EOQ is directly proportional to the sales per period.

---

Definitions:

Direct Materials

Raw materials that can be directly traced to the manufacturing process of a product.

Raw Materials

Basic materials that are used in the initial stages of the production process, before being transformed into finished products.

Inventory Accounts

Inventory accounts are accounting records that track the quantity and value of goods that a company holds for sale in the ordinary course of business.

Overhead Rates

Rates used to allocate overhead costs to products or service units, typically calculated by dividing total overhead costs by some base such as labor hours or machine hours.