Which of the Following Statements Is True of Slack

question 61

Multiple Choice

Which of the following statements is true of slack?

• A)Employing slack usually creates value through exploitation.
• B)Slack adds value in the form of economies of scale.
• C)Slack destroys value through expansion of resources.
• D)It refers to the lag in production due to inadequate resources.

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Definitions:

Machine-Hours

A measure of production output or work using machines, calculated as the number of machines used multiplied by the hours they operate.

Fixed Overhead Budget Variance

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

Predetermined Fixed Manufacturing Overhead Rate

A rate used to allocate fixed manufacturing overhead to products based on a predetermined activity level.

Fixed Manufacturing Overhead Budget Variance

The difference between the actual fixed manufacturing overhead costs and the budgeted fixed overhead costs.