Safety Stock ______

question 11

Multiple Choice

Safety stock ______.

• A)is the minimal level of inventory that a company seeks to maintain a buffer against the mismatch between forecasted and actual demand
• B)is the level of finished products that a company maintains to take advantage of demand in new markets
• C)is the level of finished products that a company maintains to ensure it is safe from government inspection
• D)is the level of finished products that a company needs to manufacture to ensure the price is protected from increase or decrease

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Definitions:

Prevention Costs

Expenses incurred to avoid defects in products or services, including costs related to quality control and training.

Appraisal Costs

Costs associated with inspecting and testing both raw materials and finished products to ensure quality standards are met.

Internal Failure Costs

Costs associated with defects found before the delivery of a product to the customer, such as scrap and rework expenses.

Responsibility Accounting

A system of accounting that segments financial information by areas of responsibility, allowing managers to be held accountable for their areas' financial performance.