Levenworth Company Incurs Unnecessary Costs Each Period Because of the Excess

question 94

Multiple Choice

Levenworth Company incurs unnecessary costs each period because of the excess quantities of inventory maintained to meet unexpected customer demand.The costs of inventory financing,storage,supervision,and obsolescence could most likely be reduced by which of the following practices?

• A) Activity-based costing
• B) Just-in-time inventory
• C) Total quality management
• D) Benchmarking

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Definitions:

Pre-Tax Cash Flows

The amount of cash generated by a company's operations before considering the impact of income taxes.

Just-In-Time

An inventory management strategy that aligns raw-material orders from suppliers directly with production schedules to reduce stock levels and increase efficiency.

Production Flexibility

The capability of a manufacturing system to adapt efficiently to changes such as new product introductions, production volume adjustments, and design alterations.

Corporate Governance

The system by which a company is directed and controlled. If properly implemented it should provide incentives for top management to pursue objectives that are in the interests of the company and it should effectively monitor performance.