AICPA Exam CPA-Business Topic 2 Question 14 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 14
Topic #: 2

When the Economic Order Quantity (EOQ) model is used for a firm, which manufactures its inventory, ordering costs consist primarily of:

AInsurance and taxes.

BStorage and handling.

CProduction set-up.

DCost of funds.

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. When the economic order quantity (EOQ) model is used for a firm that manufactures its own inventory, ordering costs consist primarily of production set-up.

Choices 'a', 'b', and 'd' are incorrect, per the above Explanation:.

by Lucina at May 05, 2022, 10:33 PM

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