If Toy Stores Overestimate the Demand for a Toy in 2004

question 131

Multiple Choice

If toy stores overestimate the demand for a toy in 2004 and,as a result,have an unexpectedly large number of them on hand at the end of the year,the value of the increased inventory of those toys will be counted as

• A)investment in 2004
• B)investment in 2005
• C)consumption in 2004
• D)consumption in 2005
• E)part of GDP only when the toys are sold

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Definitions:

Period Costs

Costs that are not tied directly to the production process and are expensed in the period they are incurred, such as selling and administrative expenses.

Product Costs

Costs that are directly linked to the creation of a product, including materials, labor, and overhead.

September

The ninth month of the Gregorian calendar.

Manufacturing Overhead Cost

All indirect costs associated with manufacturing, including indirect labor, materials, and expenses that cannot be directly attributed to a specific product.