Overproduction or Underproduction of Goods and Services, Misallocation of Resources

question 78

Multiple Choice

Overproduction or underproduction of goods and services, misallocation of resources, and poor response times are the results of a firm's having

• A) poor relationships with suppliers.
• B) poor relationships with customers.
• C) inadequate information.
• D) a surplus of information.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Product Costs

All costs that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead. Also see Inventoriable costs.

Manufacturing Costs

Expenses directly related to the production of goods, including direct materials, direct labor, and manufacturing overhead.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, used to cover fixed costs and generate profits.