Reference 14-2: Jensen Autos, One of the Largest Car Dealers in Eau

question 51

Multiple Choice

Reference 14-2:
Jensen Autos, one of the largest car dealers in Eau Claire, sells about 700 vehicles a year. The cost of placing an order with their supplier is $1,100, and the inventory carrying costs are $120 for each car. Most of their sales are in late fall of each year.
-How many orders will the dealer need to place this year? Round your answer to the whole number.

• A) 4 orders
• B) 5 orders
• C) 6 orders
• D) 7 orders

---

Definitions:

Work in Process

Inventory items that are currently in the midst of the production process, not yet completed goods.

Standard Costs

Predetermined costs for products or services, used for budgeting and measuring performance against actual costs.

Raw Materials

These are the basic substances in their natural, modified, or semi-processed state, used as an input to a production process for manufacturing.

Standard Costs

Predetermined or estimated costs used to compare against actual costs, serving as a benchmark for measuring financial performance.