If a Firm Finds That It Has a Larger Stock

question 12

Multiple Choice

If a firm finds that it has a larger stock of inventory at the end of the period than it had at the start, the difference would be:

• A) counted as investment.
• B) subtracted from total GDP.
• C) counted as consumption on the assumption that it will eventually be sold.
• D) counted as net exports.

---

Definitions:

Variable Overhead Rate

the rate at which variable overhead costs are applied to units of production, often used in calculating the total cost of producing a product.

Fixed Manufacturing

Costs associated with manufacturing that remain constant, regardless of the level of production, such as rent for factory premises.

Variable Overhead

Costs that vary with production volume but cannot be traced directly to each unit produced, such as utilities for the manufacturing plant.

Supplies Variance

The difference between the budgeted cost of supplies and the actual cost incurred.