COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Maximum and equal
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Minimum and equal
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It can be maximum or minimum depending upon case to case.
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Minimum and unequal
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Detailed explanation-1: -Concept: The ordering quantity Q* at which holding cost becomes equal to ordering cost and the total inventory cost is minimum is known as Economic Order Quantity (EOQ). Cycle time: Order cycle time refers to the time period between placing one order and the next order.
Detailed explanation-2: -Economic Order Quantity (EOQ) is the level of inventory that minimizes the total cost of holding and ordering inventory over a period of time. Usually the time period is one year. The total cost of inventory is the sum of the purchase, ordering and holding costs.
Detailed explanation-3: -What Is Economic Order Quantity (EOQ)? Economic order quantity (EOQ) is a calculation companies perform that represents their ideal order size, allowing them to meet demand without overspending. Inventory managers calculate EOQ to minimize holding costs and excess inventory.
Detailed explanation-4: -Economic order quantity is that quantity at which cost of holding and carrying inventory is .
Detailed explanation-5: -Economic Order Quantity is the ideal order quantity a company should purchase for its inventory. This order quantity is that order quantity which minimizes the total holding cost and ordering cost. Was this answer helpful?