Cisco, a Provider of Modems and Routers Has Decided It

question 22

Multiple Choice

Cisco, a provider of modems and routers has decided it is more profitable to outsource its production than to make it themselves. To decide this, they have performed __________.

• A) sensitivity analysis
• B) make-or-buy analysis
• C) scenario analysis
• D) financial modeling

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Definitions:

Variable Overhead Efficiency Variance

The difference between the actual and expected (or standard) variable overhead costs based on the actual production hours.

Standard Activity

A benchmark or norm for measuring performance or efficiency, often used in costing and budgeting processes.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or job orders, calculated before the production period based on estimated costs and activity levels.

Labor Rate Variance

It's the difference between the actual cost of labor and the budgeted or standard cost of labor.