A Firm Should Outsource Only Activities Where It Cannot Create

question 98

True/False

A firm should outsource only activities where it cannot create value or where it is at a substantial disadvantage compared to competitors.

---

Definitions:

Underapplied

A situation where the allocated or applied costs are less than the actual costs incurred.

Fixed Overhead Budget Variance

The difference between the actual fixed overhead costs incurred and the budgeted or expected costs.

Unfavorable

A term used in variance analysis to describe a situation where actual results are worse than expected results, leading to a negative impact on financial performance.

Favorable

A term used in finance and accounting to describe results that are better than expected or budgeted.