Which of the following would not lead to a build up inventory as a strategy to increase operating income?
A) Cutting overhead costs as year-end approaches.
B) Plant manager switching to make products that absorb the highest amounts of fixed cists
C) Plant manager accepting an order to increase production and build up inventory when another plant in the same company would be better suited to take on the order
D) Allocating resources to production by deferring maintenance of equipment and building beyond the current period

Question

Quizplus · Accepted Answer

Cutting overhead costs would not lead to a build up of inventory. In fact, it may lead to a reduction in inventory as production is scaled back to reduce costs. Choices B, C, and D all involve decisions that could potentially lead to an increase in inventory as a strategy to increase operating income.

Which of the Following Would Not Lead to a Build