If a Firm Has Excess Production Capacity, It

question 134

Multiple Choice

If a firm has excess production capacity, it

• A) can serve as a safety net if demand suddenly picks up.
• B) may be a sign that there's too much competition.
• C) may make sense for the marketing manager to try to find new markets for current products.
• D) can be costly.
• E) All of these.

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Definitions:

Ending Inventory

The value or quantity of goods and materials available at the end of an accounting period.

Perpetual Inventory System

An inventory management method where transactions are recorded in real time, providing a continuous account of inventory levels.

LIFO

"Last In, First Out" is an inventory valuation method where the last items placed in inventory are the first ones to be used or sold.

Ending Inventory

The financial value of items up for sale at the end of a fiscal period.