Discovery-Driven Planning Requires That Managers Make Assumptions About the Future

question 40

True/False

Discovery-driven planning requires that managers make assumptions about the future in order to build their forecasts and targets, recognizing that these assumptions may be quite wrong.

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Definitions:

Period Cost

Costs that are expensed in the period they are incurred and are not directly tied to production activity.

Indirect Costs

Costs that cannot be directly linked to the production or sale of a specific product or service, such as administration, rent, and utilities.

Manufacturing Overhead

All indirect costs associated with manufacturing beyond direct materials and direct labor, such as utilities and maintenance.

Variable Costs

Costs that vary directly with the level of production or sales volume.