Asked by Chirag Parmar on Jun 20, 2024
Verified
WIP inventories:
A) are not included on the balance sheet.
B) are associated with manufacturing.
C) are the same as VMI inventories.
D) are not impacted by EOQ.
WIP Inventories
refers to Work-in-Process Inventories, which consist of materials and products that are partially completed in the production process.
VMI Inventories
Vendor Managed Inventory; a supply chain management practice wherein the supplier of goods manages levels of inventory at the customer's premises.
EOQ
Economic Order Quantity, a formula used to determine the optimum order quantity that minimizes total inventory costs.
- Understand Work-In-Process (WIP) inventories and their role in manufacturing.
Verified Answer
MM
Miselo MhlongoJun 26, 2024
Final Answer :
B
Explanation :
WIP (Work-in-Progress) inventories are a type of inventory that is associated with manufacturing processes. They represent partially completed products that are still in the production process. WIP inventories are not included on the balance sheet because they are not yet finished products that can be sold. VMI (Vendor-Managed Inventory) inventories are a type of inventory management system where the vendor manages the inventory levels for the customer, so it is not the same as WIP inventories. EOQ (Economic Order Quantity) is a model used to determine the optimal order quantity for inventory, but it does not impact WIP inventories because they are not yet at the stage of being ordered or sold.
Learning Objectives
- Understand Work-In-Process (WIP) inventories and their role in manufacturing.