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The amount of inventory that a company would tend to hold in safety stock would increase as the:
The amount of inventory that a company would tend to hold in stock would increase as the cost of carrying inventory decreases.
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When selecting suppliers before implementing a just-in-time (JIT) purchasing system, a company must take extreme care because a JIT purchasing system:
JIT does not entail keeping a significant amount of inventory on hand. So, suppliers must be ready to provide products as soon as there is need.
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Which of the following characteristics is a primary benefit of a just-in-time inventory system for raw materials?
JIT is designed to minimize the amount of time inventory is kept on hand before it is utilized. Thus, it eliminates non value added operations.
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What amount of annual sales must a company achieve to break even if the following information is given: Fixed Costs per month $2,500, Unit Selling Price $100, Variable cost as a percentage of sales 60%
$2,500 * 12 months = $30,000. 100% - 60% = 40% CM of sales. $30,000/40% = $75,000
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Which one of the following represents methods for converting A/R to cash?
These are methods for converting A/R to cash.
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The reorder point for a firm is the point at which the firm should reorder more inventory and it is calculated as:
The formula for reorder point needs to consider the amount of safety stock required by the firm, as well as the time it would take to acquire more inventory.
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