When Estimating the Cost Structure of a Manufacturing Supplier

question 15

Multiple Choice

When estimating the cost structure of a manufacturing supplier:

• A)material costs are difficult to estimate.
• B)direct labor costs are the easiest costs to estimate.
• C)prices of raw materials are not commonly accessible.
• D)labor rates are typically uniform across different plant locations.
• E)equipment depreciation is typically the largest cost element in overhead.

---

Definitions:

Law Of Supply

A principle that states there is a direct relationship between the price of a good and the quantity of it producers are willing to supply. As the price of a good increases, producers will wish to supply more of it. As the price decreases, producers will wish to supply less.

Producers

Individuals or businesses that create goods or provide services.

Supply

The total amount of a good or service available for purchase at any given price level in a market.

Producer Surplus

The difference between the amount a producer is willing to accept for a good and the actual price they receive.