Which of the Following Is TRUE of Inventory Level

question 94

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.

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Definitions:

Activity Variance

The difference between the expected activity level and the actual activity level, often analyzed in budgeting and variance analysis.

Net Operating Income

A company's revenue minus its operating expenses, not including taxes and interest.

Service Company

A business that provides intangible products or services to customers, as opposed to selling physical goods.

Flexible Budget

An elastic budget that varies according to fluctuations in volume or operational activities.