Cost and ________ Are the Two Main Drivers Behind Make-Or-Buy

question 15

Multiple Choice

Cost and ________ are the two main drivers behind make-or-buy choices made by global companies when they engage in global supply chains.

• A) production capacity
• B) assurance of continual supply
• C) quality control
• D) control

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Definitions:

Predetermined Overhead Rate

A rate used in cost accounting to allocate overhead costs based on an estimated activity level.

Direct Labor-hours

The hours that workers contribute directly towards the manufacture of goods over a specified period.

Fixed Manufacturing Overhead

Costs associated with production that do not vary with the level of output, such as depreciation of machinery and the salary of the factory manager.

Job Cost

The total cost of labor, materials, and overhead allocated to a specific job or project.