When Estimating the Cost Structure of a Manufacturing Supplier

question 15

Multiple Choice

When estimating the cost structure of a manufacturing supplier:

• A)material costs are difficult to estimate.
• B)direct labor costs are the easiest costs to estimate.
• C)prices of raw materials are not commonly accessible.
• D)labor rates are typically uniform across different plant locations.
• E)equipment depreciation is typically the largest cost element in overhead.

Understand the concept of price setting in response to market or competitor actions.

Grasp how companies set prices to achieve a target profit or sales volume.

Understand various pricing policies and their application in different market contexts.

Comprehend the concept and implications of fixed and dynamic pricing strategies.

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Definitions:

Machine-Hours

A measure of production time, quantifying the hours a machine is operated in the manufacturing of a good.

Activity Rate

The activity rate is a cost accounting term that refers to the rate at which indirect costs are allocated to products or services based on specific activities.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities and resources used in the production or delivery process.

Activity Rate

In cost accounting, it's the cost driver rate used in activity-based costing to assign indirect costs to products or services based on each activity's frequency and intensity.