Part 1: Which of the following would not lead to a build up inventory as a strategy to increase operating income?

A. 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

B. Plant manager switching to make products that absorb the highest amounts of fixed cists

C. Allocating resources to production by deferring maintenance of equipment and building beyond the current period

D. Cutting overhead costs as year-end approaches.

Part 2: Which of the following is not one of the reasons why absorption costing might also be used for internal reporting?

A. It is more useful for managerial decision making than variable costing

B. It can help prevent managers from making decisions that make their performance look good to the detriment of income reported to shareholders

C. It is cost effective and less confusing for managers to use one common method for both internal and external reporting

D. For long-term decision making both variable and fixed costs must be considered for inventory related decisions