Which one of the following statements is true?
A)The EOQ is most accurate when both inventory and order costs are estimated on a full cost basis.
B)The EOQ is most accurate when both inventory and order costs are estimated on a pure variable cost basis.
C)The EOQ is most accurate when inventory costs are estimated on a full cost basis while order costs are estimated on a pure variable cost basis.
D)The EOQ is most accurate when inventory costs are estimated on a pure variable cost basis while order costs are estimated on a full cost basis.

Question

Quizplus · Accepted Answer

The EOQ model is most accurate when both inventory and order costs are estimated on a pure variable cost basis, as it assumes costs vary directly with the quantity ordered and held.

Which One of the Following Statements Is True