Which of the Following Is the Best Description of Outsourcing

question 100

Multiple Choice

Which of the following is the best description of outsourcing?

• A) Any activity that adds value to some input by transforming it into an output for an internal or external customer
• B) An approach by which firms move away from department-oriented organization and toward process-oriented team structures that cut across old departmental boundaries
• C) The strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials and resources
• D) The strategy of using the Internet and word-of-mouth marketing to spread product information
• E) The strategy of owning the means by which an organization produces goods or services

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Definitions:

Absorption Costing

A financial tracking approach that incorporates all costs associated with producing an item, such as direct materials, direct labor, along with all manufacturing overhead costs, whether they are fixed or variable.

Markup Percentage

The percentage added to the cost of goods to achieve a selling price, representing profit margin.

Required Return

The minimum profit or yield that investors expect to receive on an investment, considering the associated risks.

Target Costing

Target costing involves setting a planned cost for a product and then designing the product’s development cycle to meet this cost to maintain profitability.