Distortion in MRP Systems Can Be Minimized When Safety Stock

question 100

Multiple Choice

Distortion in MRP systems can be minimized when safety stock is held at the:

• A) purchased component or raw material level.
• B) work-in-process level.
• C) finished goods level.
• D) A and B
• E) A and C

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Definitions:

Activity-Based Costing

A costing methodology that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption.

Machine-Hours

A measure of production time, calculated by multiplying the number of machines used by the number of hours they operate.

First Stage Allocations

This involves the assignment of overhead costs to different departments or cost centers as part of the process in activity-based costing.

Overhead Cost

All indirect costs associated with manufacturing or providing a service, not directly traceable to a specific product.