What Should You Do If the Severity of a Risk

question 38

Multiple Choice

What should you do if the severity of a risk is high and the frequency of the risk event occurring is high?

• A) Avoid the risk.
• B) Manage the risk.
• C) Purchase insurance.
• D) Accept the risk.

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Definitions:

Applied Overhead

Costs related to production that are not directly tied to a specific product but allocated based on a formula or measure.

Machine Hours

A measure of the actual operating time of a machine or piece of equipment, used for costing and manufacturing planning purposes.

Direct Labor

The cost of wages for employees directly involved in the manufacturing or production of goods or services.

Work in Process Inventory

Represents the cost attributed to partially completed goods, which are still being manufactured.