Which of These Is Not an Advantage of a Shorter

question 37

Multiple Choice

Which of these is not an advantage of a shorter inventory turnover period?

• A)It means fewer funds are tied up in inventory so more are available for use in the business.
• B)It means less storage space is needed for inventory.
• C)It means that management can have the cost advantage of buying in bulk.
• D)It means that inventory is less likely to become obsolete or out of date.

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Definitions:

Standard Quantities

Standard quantities refer to the predetermined amounts of material, labor, and overhead that should be used in the production of a good or service, serving as a basis for cost control and efficiency analysis.

Standard Rates

Predetermined costs or charges used for billing, budgeting, or for setting up baseline expectations for financial performance.

Standard Direct Materials Quantity

The amount of raw materials budgeted to be used in the production of goods, based on efficiency standards.

Waste And Spoilage

Materials or products that are lost, unusable, or less valuable due to inefficiencies or defects in the production process.