To Avoid Tariffs, a Japanese Firm Moves Its Final Assembly

question 170

Multiple Choice

To avoid tariffs, a Japanese firm moves its final assembly line to Mexico and then ships the final products to Canada. This is an example of

• A) trade deflection.
• B) trade diversion.
• C) protectionism.
• D) rules of origin.

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Definitions:

Overhead Application Rate

A rate used to allocate overhead costs to products or services based on a specific formula, such as labor hours or machine hours.

Machine Hours

A measure of production time, calculating how long a machine has been in operation, often used to allocate manufacturing overhead.

Direct Labor Hours

The total hours worked by employees directly involved in the production of goods or services.

Direct Labor Dollars

The total cost of workforce labor that is directly involved in the manufacturing or production of goods and services.