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IMANET Exam CMA Topic 5 Question 97 Discussion

Actual exam question for IMANET's CMA exam
Question #: 97
Topic #: 5
[All CMA Questions]

The Stewart Co. uses the economic order quantity (EOQ) model for inventory management.A decrease in which one of the following variables would increase the EOQ?

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Suggested Answer: D

A firm enjoys a tax benefit upon recognizing a loss on disposal because the loss reduces book income. The old equipments book value is historical cost ($220,000) minus accumulated depreciation ($208,000).

The tax benefit is the accrual-basis loss on the disposal times the effective tax rate.


by Alonzo at Sep 18, 2024, 02:19 PM

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Pearlene
9 days ago
Hmm, this reminds me of that time I tried to calculate the perfect number of cookies to buy for a party. Spoiler alert: I ended up with way too many.
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Walton
10 days ago
Alright, time to channel my inner accountant. I'm going with D - a decrease in carrying costs. The lower the holding costs, the more you'll want to order at once.
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Allene
12 days ago
Wait, what? This is too much math for me. I'm just going to guess and hope for the best.
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Joseph
13 days ago
C, definitely C. Lowering the safety stock level would mean you need to order more, so the EOQ would go up. Easy peasy.
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Willard
1 days ago
I agree, lowering the safety stock level would definitely increase the EOQ.
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Vallie
18 days ago
I'm pretty sure it's B - a decrease in the cost per order would increase the EOQ. Gotta love those inventory management models!
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Owen
27 days ago
Hmm, a decrease in carrying costs seems like the obvious answer here. The EOQ formula is all about balancing ordering and holding costs.
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Francene
13 days ago
A: I think a decrease in carrying costs would definitely increase the EOQ.
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William
2 months ago
I think a decrease in carrying costs would increase the EOQ because it would make it more expensive to hold inventory.
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Kaitlyn
2 months ago
I disagree, I believe a decrease in annual sales would increase the EOQ.
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Florinda
2 months ago
I think a decrease in cost per order would increase the EOQ.
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