Which of the Following Would Cause the Greatest Increase in a Company's

question 68

Multiple Choice

Which of the following would cause the greatest increase in a company's inventory turnover ratio?

• A)Keeping the same amount of inventory on hand while unit sales are increasing.
• B)Increasing the amount of inventory on hand while unit sales are increasing.
• C)Keeping the same amount of inventory on hand while unit sales are decreasing.
• D)Decreasing the amount of inventory on hand while unit sales are increasing.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services and are an integral part of the finished product.

Variable Factory Overhead

Variable factory overhead consists of production costs that vary with the level of output, such as utilities and indirect materials.

Fixed Costs

Costs that tend to remain the same in amount, regardless of variations in the level of activity.

Differential Revenue

The additional revenue generated from choosing one alternative over another in decision-making processes.