Because costs that are inventoried are not expensed until the units associated with them are sold,a manager can produce more units than are expected to be sold in a period without reducing a firm's net income.

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This is true. When costs are inventoried, they are held off as an expense until the units associated with them are sold. This means that a manager can produce more units than are expected to be sold in a period without reducing a firm's net income, since the expenses associated with the excess units won't be recorded until they are sold.

Because Costs That Are Inventoried Are Not Expensed Until the Units