Of the Following,which Is NOT an Accurate Statement About the EOQ

question 30

Multiple Choice

Of the following,which is NOT an accurate statement about the EOQ model?

• A)The actual cost of the inventory item is ignored.
• B)Costs are divided into two categories: the cost of ordering and the cost of storage.
• C)EOQ is an attempt to determine the appropriate level of inventory.
• D)The EOQ assumes the sales rate fluctuates with seasonal changes.

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Definitions:

Storeroom

A room or space where supplies, materials, or equipment are kept for future use.

Credit

An accounting entry that either increases a liability or equity account, or decreases an asset or expense account. It is positioned on the right side of an accounting ledger.

Predetermined Overhead Rate

A rate calculated before a period begins, used to apply manufacturing overhead costs to products based on a relevant activity, such as machine hours or labor hours.

Underapplied

Describes a situation where the allocated overhead costs in accounting are less than the actual overhead costs incurred.