A Tolerance Reserve or Factor of Safety in Product Design

question 43

True/False

A tolerance reserve or factor of safety in product design is needed to account for engineering uncertainty regarding the maximum variation allowable and compatibility with satisfactory product performance.

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Definitions:

Parent Company

A corporation that owns enough voting stock in another firm to control management and operations.

Held-to-Maturity Securities

Investment securities that a company has the intent and ability to hold until a specified maturity date.

Interest Revenue

Income earned from lending investments or depositing funds in interest-bearing accounts, often reported on the income statement.

Held-to-maturity Securities

Held-to-maturity Securities are debt securities that an investor intends and is able to hold until their maturity date, recorded at amortized cost in financial statements.