If a company increases production levels without increasing its units sold, both its full costing income and cash flows will be larger than if production were at a lower level.

Question

Quizplus · Accepted Answer

If a company increases production levels without increasing units sold, its inventory levels will increase, which will cause an increase in its full costing income but a decrease in its cash flows due to the increase in inventory costs.

If a Company Increases Production Levels Without Increasing Its Units