An Unexpected ________ in Inventories Has ________ Effect on Future

question 290

Multiple Choice

An unexpected ________ in inventories has ________ effect on future production.

• A) decrease; no
• B) decrease; a positive
• C) increase; a positive
• D) increase; no

Grasp the influence of production bottlenecks on pricing strategies and product prioritization.

Comprehend various product pricing methods including cost-plus and variable cost approaches.

Understand the variable cost method for pricing, including the need to cover specific costs with markup.

Recognize when discontinuing a product or segment may not be the best financial decision.

---

Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period.

Materials

Raw inputs or components used in the manufacturing or production process to create a final product.

Equivalent Unit

A concept used in cost accounting to express the amount of work done by incomplete units in terms of fully completed units.

Weighted-Average Method

An approach to inventory valuation where the cost of goods sold and ending inventory figures are derived from the average cost of all units on sale during that interval.