Wasted Capacity (Or Inventory) Occurs When

question 33

Multiple Choice

Wasted capacity (or inventory) occurs when

• A) there are excessive cancellations.
• B) there are few cancellations.
• C) an expensive backup needs to be arranged.
• D) all of the above

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Definitions:

Freight Charges

Costs associated with the transportation of goods from one location to another, typically paid by the shipper or receiver.

Straight-Line Method

A method of calculating depreciation of an asset by evenly spreading its cost over its expected useful life.

Salvage Value

The estimated residual value of an asset after its useful life has ended and it can no longer be used for its originally intended purpose.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting how much of the asset's value has been used up during a specific period.