Suppose a Company allocates 40% of its labor to production and the remainder to SG&A. What happens if the actual portion that should be allocated to production is 20%, then:

A. there will be an understatement in income that would be mitigated if the inventory turnover ratio is high.

B. there will be an understatement in income that would be mitigated if the inventory turnover ratio is low

C. there will be an overstatement in income that would be mitigated if the inventory turnover ratio is high.

D. there will be an overstatement in income that would be mitigated if the inventory turnover ratio is low.

Answer rating: 100% (QA)

There will be an overstatement in income that would be mitigagted if the inventory turnover rat... View the full answer