A Certain Type of Computer Costs $1,000, and the Annual

question 71

Multiple Choice

A certain type of computer costs $1,000, and the annual holding cost is 25%. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity?

• A) 16
• B) 70
• C) 110
• D) 183
• E) 600

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Definitions:

Ending Inventory

Ending Inventory is the total value of all inventory, including raw materials, work-in-process, and finished goods, that a company has at the end of an accounting period.

Perpetual Inventory System

A continuously updated system for tracking inventory that adjusts in real-time with each sale or return transaction, maintaining constant, accurate inventory records.

Last-In, First-Out

An inventory valuation method that assumes the most recently produced items are sold first, with costs of the latest inventory purchases used first in determining profitability.

Cost of Goods Sold

The direct costs tied to the production of goods sold by a company, including both materials and labor costs.