APICS Certified Supply Chain Professional (CSCP) — Question 70

Producing finished goods in a manufacturing environment has which of the following financial impacts?

Answer options

• A. Conversion of assets to overhead costs
• B. Conversion of overhead costs to assets
• C. Conversion of overhead costs to liabilities
• D. Conversion of assets to equity

Correct answer: B

Explanation

The correct answer is B because in a manufacturing environment, the production of finished goods leads to the capitalization of overhead costs as assets on the balance sheet. Options A, C, and D are incorrect as they incorrectly represent the financial relationships between assets, overhead costs, and liabilities or equity.