To discourage producing for inventory,management can:
A)incorporate a carrying charge for inventory in the internal accounting system
B)evaluate performance over a three- to five-year period rather than a single year
C)evaluate non-financial measures such as units in ending inventory compared to units in sales
D)All of these answers are correct.

Question

Quizplus · Accepted Answer

All of the given choices can help in discouraging producing for inventory. Incorporating a carrying charge for inventory in the internal accounting system encourages better inventory management and reduces the cost associated with it. Evaluating performance over a three-to five-year period provides a long-term perspective and helps in identifying if overproduction is happening. Evaluating non-financial measures such as units in ending inventory compared to units in sales can help in identifying if overproduction is happening, and can serve as a warning sign to reduce production. Hence, all the given choices are correct.

To Discourage Producing for Inventory,management Can