Which of the following items is more complicated for a manufacturing company than for a retail operation?
A)Accounting for inventory costs
B)Trying to forecast the effects of financial decisions on the income statement
C)Both accounting for inventory costs and trying to forecast the effects of financial decisions on the income statement
D)Neither accounting for inventory costs nor trying to forecast the effects of financial decisions on the income statement

Question

Quizplus · Accepted Answer

Both accounting for inventory costs and trying to forecast the effects of financial decisions on the income statement are more complicated for a manufacturing company than for a retail operation. Manufacturing companies have to deal with raw materials, work in progress inventory, and finished goods inventory, which require more complex accounting methods than a retail operation that usually deals with finished goods only. Additionally, forecasting financial decisions for a manufacturing company is more complex due to factors such as production costs, production volumes, and capacity utilization.

Which of the Following Items Is More Complicated for a Manufacturing