Operating shortage costs that result from lost production and sales are caused by
A) not holding enough raw materials in inventory.
B) running out of finished goods.
C) restrictive credit policies.
D) All of the above.

Question

Quizplus · Accepted Answer

All of the above options can cause operating shortage costs that result from lost production and sales. Not holding enough raw materials in inventory can lead to production delays or shutdowns, causing lost sales. Running out of finished goods can also lead to lost sales. Restrictive credit policies can prevent customers from being able to purchase products, leading to reduced sales and lost production.

Operating Shortage Costs That Result from Lost Production and Sales