The Essential Issue in Satisfying Customers in the Make-To-Stock Environment

question 29

True/False

The essential issue in satisfying customers in the make-to-stock environment is to balance the level of finished inventory against the level of service to the customer.

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Definitions:

Direct Labor Hours

The total hours worked by employees who directly participate in the production of goods detailed.

ABC

A costing method that identifies activities in an organization and assigns the cost of each activity to products or services according to the actual consumption.

Overhead Costing Systems

Methodologies used to allocate indirect costs (overhead) to products or services, which may vary depending on the costing approach (e.g., traditional costing or activity-based costing).

Overhead Allocation Base

A metric used to assign indirect costs to cost objects, often based on time, labor, or machine hours.