Inventory Standards Published by Trade Associations and the Federal Government

question 86

True/False

Inventory standards published by trade associations and the federal government for companies of all sizes in all industries is called the target average inventory.

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Definitions:

Finished Goods

Goods that have gone through the entire manufacturing cycle and are prepared for customer acquisition.

Standard Costs

Preset costs for materials, labor, and overhead used to measure the performance of manufacturing activities against planned costs.

Variable Costing

A costing method where only variable costs are charged to product costs, with fixed costs treated as period costs.

Absorption Costing

A cost accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.