Question

Ways to "produce for inventory" that result in increasing operating income include ________.

Answer 1

The options are:

A switching production to products that absorb the least amounts of fixed manufacturing costs

B undervaluing ending inventory by not recording certain costs that have been incurred

C delaying items that absorb the greatest amount of fixed manufacturing costs

D switching production to products that absorb the most amounts of fixed manufacturing costs

E deferring maintenance to accelerate production

Answer:

deferring maintenance to accelerate production

Explanation:

In the production process if we want to increase operating income we need to reduce cost.

Producing for inventory to reduce cost involves production process that minimises what a business spends in order to increase profit.

A way this can be done is to defer or delay items increase cost of production.

For example if we defer maintenance to increase production, it will result in higher operating income.