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Fill in the blank:
Income reaches the highest level at the _________ point of the business cycle.
Consider a fixed-period system (FPS). Choose the most accurate statement regarding an FPS.
a. It orders a fixed quantity of items when the inventory position reaches or drops below the reorder point (r).
b. It orders sufficient stock at the time of review to bring the inventory position up to the replenishment level (M).
c. It maintains a constant order quantity in every review period.
d. It checks the inventory position on a continuous basis.
Direct Material
$ 500,000
Direct Labor
$ 300,000
Variable Overhead
$ 100,000
Fixed Cost
$ 1,200,000
Total Cost
$ 2,100,000
At the start of the current year, the company received an order of 2,000 drives from a computer company in china. Management of GK, Inc. has mixed felling about the order. On one hand they welcome the order because they currently have excess capacity. Also, this is company’s first international order. On the other hand, the company in China is only willing to pay $100 per unit.