If a Company Uses Standard Absorption Costing,how Could a Business

question 25

Multiple Choice

If a company uses standard absorption costing,how could a business manager exploit that accounting method in order to boost profit without violating the accounting standards?

• A) By building up inventory levels, fixed manufacturing costs could be 'stored up' in inventory, the cost of sales would be lower and profit would be higher.
• B) By reducing inventory levels, the manager could show higher sales revenues, and thus report higher profit.
• C) By coding administrative costs to inventory, the manager could report lower total expenses and thus report higher profit.
• D) By adopting just-in-time inventory management, the manager could reduce the costs of financing and storing inventory which would in turn help boost profit.

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Definitions:

Feminization of Poverty

The feminization of poverty refers to the phenomenon where women represent a disproportionate percentage of the world's poor, often attributed to wage disparity, unemployment, and the burden of single parenthood.

Poverty

A condition where individuals or groups lack the financial resources to meet basic living needs, such as food, housing, and healthcare.

First Nations Children

The young members of the First Nations, the various Aboriginal peoples in Canada who are neither Inuit nor Métis, often focusing on their rights, well-being, and cultural heritage.

Proletariat

The workers.