Sourcing and Procurement from External Suppliers Are ________ Activities

question 156

Multiple Choice

Sourcing and procurement from external suppliers are ________ activities.

• A) downstream
• B) internal
• C) upstream
• D) irrelevant

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Definitions:

Degree of Operating Leverage (DOL)

A measure of how much a company's operating income will change in response to a change in sales, indicating the company's sensitivity to changes in business volume.

Total Contribution Margin

The difference between sales revenue and variable costs of production, indicating how much revenue contributes toward covering fixed costs and generating profit.

Pretax Income

The income a company generates before income taxes are deducted, also known as earnings before tax (EBT).

Variable Costing

An accounting method that only allocates variable costs to production, treating fixed costs as period costs that are charged to expense as they are incurred.