The correct answer is: B. batch
Economic batch quantity (EBQ) is the optimal quantity of goods to produce in a batch. It is the quantity that minimizes the total cost of production, including the cost of materials, labor, and overhead.
EBQ is important in industries where batch production is used. Batch production is a manufacturing process in which a number of identical or similar items are produced in a single batch. This is in contrast to continuous production, in which items are produced one at a time.
Batch production is often used when the demand for a product is not high enough to justify continuous production. It can also be used when the product is complex or requires a lot of customization.
The EBQ is determined by a number of factors, including the cost of materials, the cost of labor, the cost of overhead, and the demand for the product.
The EBQ can be calculated using the following formula:
EBQ = \sqrt{\frac{2DC}{h}}
where:
- D = the demand for the product
- C = the cost of producing one unit of the product
- h = the setup cost for each batch
The EBQ is a critical decision point for any company that uses batch production. By determining the EBQ, companies can minimize their production costs and maximize their profits.
The other options are incorrect because they are not relevant to the concept of economic batch quantity.
- Option A, job costing, is a type of costing system that assigns costs to individual jobs. This is not relevant to the concept of economic batch quantity, which is concerned with the optimal quantity of goods to produce in a batch.
- Option C, operation costing, is a type of costing system that assigns costs to individual operations. This is also not relevant to the concept of economic batch quantity.
- Option D, output costing, is a type of costing system that assigns costs to the output of a production process. This is also not relevant to the concept of economic batch quantity.