When Outbound Transportation Costs Are a Dominant Factor, Manufacturing Facilities

question 60

True/False

When outbound transportation costs are a dominant factor, manufacturing facilities should be located close to suppliers and resources needed for production.

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Definitions:

Actual Direct Labor Rate

The actual wage rate paid to workers, as opposed to the expected or standard rate used in budgeting or costing.

Direct Labor-hours

The total hours of labor directly involved in the manufacturing process of a product.

Labor Rate Variance

It is the difference between the actual cost of labor and the budgeted or expected cost of labor.

Standard Cost System

A standard cost system is a method of cost accounting that uses estimated costs for materials, labor, and overheads to compare against actual costs incurred, facilitating variance analysis and budgeting.