Figure 7-1 Use the Graph Below to Answer the Question(s)

question 19

Multiple Choice

Figure 7-1
Use the graph below to answer the question(s) .
-Which of the following is true under the Periodic Review System:

• A)a lower level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon
• B)a higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon
• C)it is more expensive to administer
• D)The only uncertainty is the magnitude of demand during the delivery lead time
• E)there are no discrepancies between physical inventory and the stock record

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Definitions:

Standard

Typically refers to an accepted level of quality or achievement that is used as a measure, norm, or model in comparative evaluations.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product and are an integral part of the finished product.

Actual Price

The price at which a good or service is sold in the market, as opposed to its listed or theoretical price.

Standard Costing

An accounting method that uses standard costs for cost control and financial reporting.