If a Toy Store Overestimates the Demand for a Toy

question 77

Multiple Choice

If a toy store overestimates the demand for a toy in 2004 and,as a result,has an unexpectedly large number of toys in stock at the end of the year,the value of the inventory of these toys will be considered as:

• A)investment in 2004.
• B)investment in 2005.
• C)consumption in 2004.
• D)consumption in 2005.
• E)a part of GDP when the toys are sold.

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Definitions:

Unfavorable Spending Variance

This occurs when the actual spending on something is higher than the budgeted or planned spending, indicating a cost management problem.

Vehicle Operating Cost

Expenses associated with running a vehicle, including fuel, maintenance, repairs, and insurance.

Snow-Day

A day on which work or school is cancelled due to heavy snowfall or extreme winter weather conditions.

Planning Budget

A budget designed for a specific level of activity, used as a tool for planning and controlling costs.