The reorder point is divided by number of sold units for per unit of time to calculate ___________?
Correct answer: C. purchase order lease time
- A. relevant carrying cost
- B. relevant ordering cost
- C. purchase order lease time
- D. number of purchase orders
Explanation
Dividing the reorder point by demand per unit of time gives the purchase-order lead time. Option c contains a typographical error, using “lease” instead of “lead,” but its intended meaning is clear.
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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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