A Firm Has the Following Gross Requirements for Item F

question 59

Multiple Choice

A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period. If EOQ lot sizing is used to set the minimum order quantity, then the planned order releases is

• A) 40 in period 1 and 0 in period 3
• B) 0 in period 2 and 80 in period 3
• C) 120 in period 2 and 120 in period 3
• D) 100 in period 2 and 100 in period 3

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Definitions:

Average Total Assets

A financial metric that represents the average value of all the assets owned by a company over a specific time period.

Operating Expenses

The costs associated with running a day-to-day business operation, excluding the cost of goods sold.

Residual Income

The income that remains after all personal debts and expenses have been paid, or in business, the net income after deducting cost of capital from operating profit.

Investment Center

A business segment within a company for which the manager has control and responsibility over cost, revenue, and investments.