If the purchase order lead time is 35 minutes and number of units sold per time is 400 units, then reorder point will be ____________?
Correct answer: A. 14000 units
- A. 14000 units
- B. 14500 units
- C. 15000 units
- D. 15500 units
Explanation
The reorder point equals demand during purchase-order lead time: 35 minutes × 400 units per minute = 14,000 units. A new order should therefore be placed when inventory reaches this level.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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