Which of the Following Describes a Company Hiring a Foreign

question 166

Multiple Choice

Which of the following describes a company hiring a foreign firm to produce a designated volume of its product to specification?

• A) Licensing
• B) Contract manufacturing
• C) Exporting
• D) Importing
• E) Direct investment

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, such as utilities, maintenance, and salaries of supervisors, not directly tied to a specific product.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.

Conversion Costs

The sum of labor and overhead expenses incurred in the process of converting raw materials into finished goods.

Work In Process

Goods and materials that are partially completed in the manufacturing process, representing an inventory category on the balance sheet.