Which One of the Following Statements Is TRUE

question 10

Multiple Choice

Which one of the following statements is TRUE?

• A)Fitness for use is how well a product or service serves its intended market at a price customers are willing to pay.
• B)The quality of service is generally easier to measure than is the quality of manufactured products.
• C)High conformance to quality in manufacturing has no effect on profit margins.
• D)Rework tends to increase lead time and inventory levels maintained in a manufacturing company.

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Definitions:

Predetermined Rate

An estimated cost rate established before the start of a period and used to apply costs uniformly throughout the period.

Actual Cost

The realized expenses incurred in the production or acquisition of goods and services, as opposed to estimated or standard costs.

Overhead Incurred

The actual overhead expenses that a company has experienced during a specific period, which may include costs related to rent, utilities, or administrative salaries.

Overhead Account

An accounting term that refers to all ongoing business expenses not directly tied to a specific product or service.