Multiple Choice QuestionWhich type of firms are likely to have the highest Work in Process Inventory balances at the end of an accounting period?Multiple choice question.Those that produce products in small batchesThose with just-in-time manufacturing processesThose that deal mainly in intellectual propertyThose with long-duration manufacturing processes
Question
Multiple Choice QuestionWhich type of firms are likely to have the highest Work in Process Inventory balances at the end of an accounting period?Multiple choice question.Those that produce products in small batchesThose with just-in-time manufacturing processesThose that deal mainly in intellectual propertyThose with long-duration manufacturing processes
Solution
The firms that are likely to have the highest Work in Process Inventory balances at the end of an accounting period are those with long-duration manufacturing processes.
Here's why:
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Those that produce products in small batches: These firms are likely to have lower Work in Process Inventory balances because they complete their products quickly and in small quantities.
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Those with just-in-time manufacturing processes: These firms aim to minimize their inventory levels, including Work in Process Inventory. They produce goods exactly when they are needed, so they don't have a lot of unfinished goods lying around.
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Those that deal mainly in intellectual property: These firms don't have a physical product that can be partially completed, so they don't have Work in Process Inventory.
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Those with long-duration manufacturing processes: These firms have products that take a long time to make. This means that at any given time, they are likely to have a lot of products that are partially completed, leading to high Work in Process Inventory balances.
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