Inventory Is a Concern Only for Manufacturing Companies

question 77

True/False

Inventory is a concern only for manufacturing companies.

---

Definitions:

Fixed Overhead

This term refers to indirect costs of running a business that do not change with the level of production or sales, such as rent, utilities, and salaries.

Variable Overhead Rate

The ratio of variable overhead costs to activity drivers such as hours worked or units produced.

Actual Production

The actual quantity of goods or services produced over a specific period, often compared to planned or theoretical production levels.

Favorable Volume Variances

Differences between planned and actual production volumes that result in lower costs or higher profits.