b. carrying costs.d. order-filling costs.3. Inventory management requires the firm to balance the quantity of inventory on hand for operations with themvestment in inventory. Two cost categories in inventory management are order costs and carrying costs.a The carrymg costs include handling costs, interest on capital invested, and obsolescence.b. The order costs include quamtity discounts lost, handling costs, and setup costs for a production rum.c. The carrying costs mclude purchasing costs, shipping costs, quantity discounts lost, and setup costs.d. The order costs include insurance costs, shipping costs, and obsolescence. 6. The Economic Order Quantity (EOQ) model can be used to establish mventory policy. In the case of amanufacturer,the EOQ is called the Economic Lot Size (ELS) or Economic Production Quantity (EPQ).Which of the following statements about the ELS is incorrect?a. The objective of the ELS model is to minimize the sum of mventory carrying costs and the costs ofproductionb. In the ELS model, the production rate is deemed to. be instantaneous.c. In the ELS model, the demand is assumed to occur at a constant rate over some period of time.d. The ELS model is used to maximize contribution margin or minimize costs given resource constraints.runs or setup costs.

EOQ provides an order quantity where holding costs and ordering costs are minimized.

3. Inventory management requires the firm to balance the quantity of inventory on hand for operations with the investment in inventory. Two cost categories in inventory management are order costs and carrying costs. a The carrying costs include handling costs, interest on capital invested, and obsolescence. b. The order costs include quantity discounts lost, handling costs, and setup costs for a production rum. c. The carrying costs include purchasing costs, shipping costs, quantity discounts lost, and setup costs. d. The order costs include insurance costs, shipping costs, and obsolescence.

3. Inventory management requires the firm to balance the quantity of inventory on hand for operations with the investment in inventory. Two cost categories in inventory management are order costs and carrying costs. a The carrying costs include handling costs, interest on capital invested, and obsolescence. b. The order costs include quantity discounts lost, handling costs, and setup costs for a production rum. c. The carrying costs include purchasing costs, shipping costs, quantity discounts lost, and setup costs. d. The order costs include insurance costs, shipping costs, and obsolescence.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter23: Other Topics In Working Capital Management

Section: Chapter Questions

Problem 1Q

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Similar questions

When inventory items are highly specialized, the best inventory costing method is ________. A. specific identification B. first-in, first-out C. last-in, first-out D. weighted average
A JIT inventory management system maintains which of the following? a. Goods should be pushed through the system on a fixed schedule based on anticipated demand. b. Goods should be pulled through the system by present demand. c. Total inventory costs are minimized by balancing setup and carrying costs. d. Inventories are needed to avoid stock-out costs.
Why do companies adopt the LIFO method of inventory costing? Your discussion should include the effects on the income statement and balance sheet.
Explain why, in the traditional view of inventory, carrying costs increase as ordering costs decrease.
Which of the following is an advantage of the periodic inventory system? A. frequent physical inventory counts B. cost prohibitive C. time consuming D. real-time information for managers
From beginning to end, place these items in the order of the flow of goods. A. cost of goods sold B. raw materials inventory C. finished goods inventory D. work in process inventory
The following information is taken from a companys records. Applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?
The costs to be accounted for consist of which of the following? A. costs added during the period B. costs of the units in ending inventory C. costs started and transferred during the period D. costs in the beginning inventory and costs added during the period
Write out the formula for the total costs of carrying and ordering inventory, and then use the formula to derive the EOQ model.
Product costs … a. are costs that are included in the determining the value of the inventory. b. are all of these. c. prime costs d. include direct materials, direct labor, and overhead e. are manufacturing costs.
Which one of the following inventory management approaches determines the finished goods inventory level and then works backward until the raw material needs are determined? A. Just-in-time B. Extended EOQ C. Materials requirements planning D. Economic order quantity
(Management Accounting) A cost management system provides ________. A) measures of inventory value and cost of goods sold for financial reporting B) cost information for strategic management decisions C) cost information for operational control D) all of the above