Answer the following questions using the information below:
Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes:
The budgeted denominator level is 800 units.
Units produced total 1000 units.
Units sold total 950 units.
Beginning inventory was zero.
The fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-What can management do to discourage production for inventory purposes?
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Quizplus · Accepted Answer

Incorporating a carrying charge for inventory in the internal accounting system (A) would make holding inventory more expensive, thus discouraging production solely for inventory purposes. Evaluating performance over a longer period (B) can help smooth out the fluctuations in production and sales, reducing the incentive to produce for inventory. Evaluating non-financial measures (C), like comparing units in ending inventory to units in sales, can provide a more comprehensive view of performance that doesn't solely focus on financial metrics, thus discouraging unnecessary production. Therefore, all these strategies (D) can help discourage production for inventory purposes.

Answer the Following Questions Using the Information Below