Greg Owns a Furniture Business and Produces Only Enough Goods

question 15

True/False

Greg owns a furniture business and produces only enough goods to meet the current demand. This helps him save inventory-holding costs. In the given scenario, Greg uses just-in-time (JIT) production.

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Definitions:

Fixed Manufacturing Overhead

Costs that do not vary with the level of production output and include expenses such as rent, property taxes, and salaries for permanent staff.

Selling Price

The amount a buyer pays to acquire a product or service from a seller.

Net Income

The amount of earnings remaining after all operational, interest, and tax expenses have been deducted from total revenue, reflecting the financial health of a company.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, reflecting the portion of sales that helps cover fixed costs and generate profit.