Which of the Following Statements Is False in Relation to Choosing

question 77

Multiple Choice

Which of the following statements is false in relation to choosing a supplier?

• A) Purchasers should consider price, quality, and reliability when choosing a supplier.
• B) Purchasers should always be on the lookout for new suppliers.
• C) Purchasers should ensure that the credit terms a supplier offers are agreeable to their company.
• D) Purchasers should carefully consider the geographical location of the supplier and the corresponding freight costs.
• E) Purchasers should focus on having only one supplier for each material needed.

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Definitions:

Labor Efficiency Variance

The difference between the actual labor hours used and the standard hours expected for the level of production achieved.

Direct Labor

The cost of workers who are directly involved in the production of goods or the delivery of services.

Standard Cost System

An accounting method that assigns predetermined costs to products and services, which are then compared to actual costs to measure performance.

Labor Rate Variance

The difference between the actual cost of labor and the budgeted or standard cost of labor, used as a measure of performance in cost control.