Which of the Following Statements Is True of Contract Manufacturing

question 25

Multiple Choice

Which of the following statements is true of contract manufacturing?

• A) It requires companies to increase its labor force to meet the scale of market demand.
• B) It requires firms to meet the scale of market demand by committing to long-term capital investments.
• C) It enables a firm to tap the greater economies of scale.
• D) It decreases organizational responsiveness to the environment.

Identify the factors that affect a firm's production decisions and profit calculations.

Recognize how changes in resource prices influence firms' production techniques and costs.

Grasp the relationship between firms' payment for resources and their overall costs and revenues.

Understand the impact of consumer incomes on market demand and the distribution of goods.

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Definitions:

Net Method

is an accounting method for recording purchases where the purchase is recorded at net of any trade discounts received.

Profit Test

A financial analysis conducted to determine the profitability or financial viability of a project, business, or product.

Reportable Segments

Identifiable business units within a corporation that are significantly engaging in business activities, generating revenues, and incurring expenses.

Identifiable Segments

Refer to portions or sections of a business that can be separately distinguished for analysis or accounting purposes, often based on their operating activities, geography, or products.