Apparent Corp. has developed the following information on product costs and inventories for a three-month period: Based on managerial judgment, the best predictor of manufacturing costs is
A) beginning inventory.
B) units manufactured.
C) ending inventory.
D) units available.

Question

Apparent Corp. has developed the following information on product costs and inventories for a three-month period:   Based on managerial judgment, the best predictor of manufacturing costs is
A) beginning inventory. 
B) units manufactured. 
C) ending inventory. 
D) units available.

Quizplus · Accepted Answer

Units manufactured represent the actual production activity during the period and would therefore be the best predictor of manufacturing costs. Beginning inventory and ending inventory may not have a direct correlation with manufacturing costs, while units available is a combination of beginning inventory and units manufactured, and may not provide a clear picture of manufacturing costs.