As a Result of the Terrorist Attacks of September 11

question 12

Multiple Choice

As a result of the terrorist attacks of September 11, 2001, many firms have employed a wide range of tactics to ensure continued flow of inventory in the face of government steps to curb terrorism. Which of the following is an inventory sourcing strategy response (as opposed to an inventory management response, or a transportation response) ?

• A)Carrying more inventory on-hand.
• B)Minimize cross-border exposure from suppliers.
• C)Shifting to air cargo shipments instead of co-habitation of products and passengers on commercial air flights.
• D)Increasing the on-hand supply of critical parts.

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Definitions:

Control Account

A summary account in the general ledger that consolidates the total amounts recorded in subsidiary ledgers.

Manufacturing Overhead

All indirect costs associated with the production process, including utilities, rent, and salaries for non-direct labor.

Raw Materials Inventory

The total cost of all components and raw materials that a company has in stock, which are intended to be used in the production of finished goods.

Accounts Receivable

Money owed to a company by its customers for goods or services delivered but not yet paid for.