Purchasing Goods from Suppliers in Developing Countries Be Risky

question 10

Essay

Purchasing goods from suppliers in developing countries be risky.Why might this be risky? How can firms reduce this risk?

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Definitions:

Standard Price

The predetermined cost assigned to materials, labor, or overhead for the purposes of budgeting and variance analysis.

Material Price Variance

The difference between the actual cost of direct materials and the expected (standard) cost, indicating budgetary performance.

Direct Materials

Raw materials that can be directly attributed to the production of goods.

Variable Manufacturing Overhead

Costs that fluctuate with production volume, such as raw materials and direct labor.