Which of the Following Factors Would Suggest the Use of a Perpetual

question 104

Multiple Choice

Which of the following factors would suggest the use of a perpetual inventory system?

• A)A small company.
• B)Inventory items with a high per-unit cost.
• C)A desire to minimize record-keeping requirements.
• D)Only annual reporting is required.

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Definitions:

Economies Of Scale

The situation when a firm’s average total cost of producing a product decreases in the long run as the firm increases the size of its plant (and, hence, its output).

Excess Production

The situation where more units of a product are produced than are demanded, often resulting in surplus inventory.

Economic Theory

Economic theory encompasses models and principles that explain the functioning of economies, markets, and the behavior of economic agents. It seeks to understand how resources are allocated, prices are set, and wealth is distributed.

Demand Curves

Graphical representations showing the relationship between the price of a good and the quantity demanded, typically downward sloping.