If a firm uses level production with seasonal sales

Question

Quizplus · Accepted Answer

Level production means that production is kept constant throughout the year, regardless of seasonal variations in sales. As sales decline during the slow season, inventory will accumulate because production is still ongoing. This excess inventory can be sold during the peak season when sales increase. Therefore, as sales decline, inventory will increase. Option B is incorrect because inventory will not decrease as sales decline, but rather increase. Option C is not directly related to level production and is therefore not the best choice. Option D is incorrect because option C is not correct.

If a Firm Uses Level Production with Seasonal Sales