For a Merchandising Company, Factory Insurance and Depreciation Are Product

question 80

True/False

For a merchandising company, factory insurance and depreciation are product costs.

Grasp the importance of aligning logistics and supply chain metrics with corporate strategy for achieving service quality, efficiency, or low-cost objectives.

Understand financial metrics and calculations relevant to supply chain and logistics, such as Gross Margin, Strategic Profit Model (SPM), and Earnings Before Interest and Taxes (EBIT).

Distinguish between metric, measure, and index, and understand the concept of order cycle time (OCT) and its implications.

Appreciate the importance of involving customers and suppliers in the development of metrics.

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Definitions:

Machine-Hours

A measurement of the amount of time machinery is operated, used in calculating production costs and efficiency.

Manufacturing Overhead

All manufacturing costs that are not directly attributable to a product, including indirect materials, labor, and other expenses.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production of goods.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated before the period begins based on estimated costs and activities.