Excess Capacity Decisions for Management Involve

question 8

Multiple Choice

Excess capacity decisions for management involve

• A)decreasing sales prices to stimulate demand.
• B)accepting special orders.
• C)outsourcing some products to specialist manufacturers.
• D)mixing production to reduce variable costs.

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Definitions:

Ending Merchandise Inventory

The final value of a company's inventory at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

Gross Profit Rate

The ratio of gross profit to net sales, expressed as a percentage, indicating the efficiency of sales relative to the cost of goods sold.

Net Sales

The revenue from goods or services sold after deducting returns, allowances for damaged or missing goods, and any discounts allowed.

Operating Expenses

Operating expenses are costs associated with running a business day-to-day, excluding costs linked to producing goods and services.