Having More Flexibility, or Being Less Vertically Integrated, Is More

question 17

Multiple Choice

Having more flexibility, or being less vertically integrated, is more valuable when _________.

• A)a firm can create its own raw materials
• B)technology used is outdated
• C)the cost to perform an activity remains the same
• D)new technologies are innovated

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Definitions:

Activity Rate

The cost driver rate used in activity-based costing to allocate expenses to cost objects based on their use of activities.

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities they require, aiming for more precise allocation of indirect costs.

Machine-Hours

A unit of measure representing the cumulative number of hours a machine is operated within a specific time frame.

Activity Rate

A measure used to assign costs to cost objects, based on the activities that drive costs in an activity-based costing system.