Even Though It Is Often the Case That No Cash

question 17

Multiple Choice

Even though it is often the case that no cash outflows result when demand exceeds capacity, __________ can nevertheless be experienced in those circumstances.

• A)foreorder costs
• B)service costs
• C)shortage costs
• D)holding costs
• E)setup costs

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Definitions:

Standard Hours Allowed

The predetermined amount of time that should be required to complete a specific task or produce a certain amount of goods.

Direct Labour Hours

The total amount of time spent by workers directly involved in the production process, contributing to the manufacturing of a product.

Standard Wage Rate

The predetermined rate of pay for a specific task or job, often used in manufacturing to set baseline labor costs.

Total Material Variance

The difference between the actual material costs incurred and the expected (standard) costs, reflecting efficiency in material usage.