Which of the Following Is Most Consistent with Efficient Inventory

question 42

Multiple Choice

Which of the following is most consistent with efficient inventory management?

• A) a high inventory turnover ratio
• B) a low incidence of production schedule disruptions
• C) a high total assets turnover
• D) a high inventory turnover ratio; a low incidence of production schedule disruptions; and a high total assets turnover

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Definitions:

Direct Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit of material.

Total Cost Variance

The overall difference between the actual costs incurred and the standard or budgeted costs, across all categories of expenses.

Variable Factory Overhead

Costs of manufacturing that vary with the level of production output, such as utility costs for machinery.

Controllable Variance

The difference between the expected cost and the actual cost that management has the power to influence or control.