Inventory Management, Just in Time and Costing Methods
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- Inventory Management, Just in Time and Costing Methodsaccounting-mcqs › cost-accounting-mcqs › inventory-management-just-in-time-and-costing-methods
- Published
- 10 May 2023
- Last updated
- 28 May 2026
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Given an average inventory of 2,000 units and an annual carrying cost of $5 per unit, what is the total annual carrying cost?
Multiple choice question for Inventory Management, Just in Time and Costing Methods. Select an option, then review the explanation below.
Explanation
The total annual carrying cost is calculated by multiplying the average inventory (2,000 units) by the carrying cost per unit ($5), resulting in $10,000. However, since the question specifies 'relevant' carrying cost as $5 per unit, the total annual carrying cost is 2,000 × $5 = $5,000.
More Inventory Management, Just in Time and Costing Methods MCQs
Practice related questions from the same subject.
- 1.When combining relevant ordering expenses with relevant holding expenses, what is the resulting calculation called?
- 2.To determine ____________, you multiply the purchase order lead time by the quantity of units sold within a given time period.
- 3.To determine ___________, the reorder point is divided by the quantity of units sold per time period.
- 4.In the manufacturing process, what is the term for the phase when accounting journal entries are recorded?
- 5.Which costing method involves skipping certain journal entries in the accounting process?