When Using Level Production, Inventory Will Peak in the Month

question 46

True/False

When using level production, inventory will peak in the month where unit sales trend above the production level.

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Definitions:

Per Unit Basis

A method of cost allocation or measurement that divides a total by the number of units to find the cost per unit.

Fixed Production Costs

Manufacturing costs that remain constant regardless of the level of production, such as rent and salaries of permanent staff.

Per Unit

A term that describes costs or revenues on a single unit basis.

Variable Costs

Expenses that directly fluctuate in proportion to the production or service activity level.