Which of the Following Is True of Inventory Level

question 52

Multiple Choice

Which of the following is true of inventory level?

• A) A purchasing manager would purchase higher inventories when prices are low and lower inventories when prices are high irrespective of inventory requirement.
• B) A marketing manager would like to have smaller inventories of finished products to ensure production of goods as per customer specification.
• C) A financial manager would keep inventory levels low to ensure that the firm's money is not unwisely invested in excess resources.
• D) A manufacturing manager would keep raw materials inventories low to ensure use of latest materials in production process.

---

Definitions:

Whole Units

The number of units in production during a period, whether completed or not.

Conversion Cost

The total cost of converting raw materials into finished products, including both direct labor and manufacturing overhead expenses.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, measured in terms of the amount of work done.

First-In, First-Out

An inventory valuation method where goods first produced or acquired are sold or used first.