Which One of the Following Is NOT a Reason for Firms

question 33

Multiple Choice

Which one of the following is NOT a reason for firms to carry inventory?

• A) To meet variations in product demand
• B) To increase production change/setup costs
• C) To allow for production scheduling flexibility
• D) To take advantage of quantity discounts
• E) To maintain independence of operations

---

Definitions:

Favorable

A term used in financial analysis to indicate that actual performance is better than expected or budgeted performance.

Overapplied

A situation where the overhead applied to products is greater than the actual overhead incurred.

Underapplied

Refers to a situation where the actual manufacturing overhead costs are higher than the overhead costs allocated to products during a specific period.

Manufacturing Overhead

Overhead costs related to the manufacturing process, including indirect labor, indirect materials, and other expenses not directly linked to the production.