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

Question

Quizplus · Accepted Answer

All of the listed choices can discourage producing for inventory. Evaluating nonfinancial measures such as units in ending inventory compared to units in sales can help identify overproduction. Evaluating performance over a longer period can discourage short-term inventory building. Incorporating a carrying charge for inventory can make it more expensive to hold inventory, further discouraging overproduction.

To Discourage Producing for Inventory, Management Can