Genetech, a Biotechnology Firm Engaging in the New Field of Genetic

question 46

Multiple Choice

Genetech, a biotechnology firm engaging in the new field of genetic engineering, has asked your advice about remaining independent and temporarily gaining access to the marketing and manufacturing expertise it lacks from another firm. You would suggest

• A) forming a limited-liability company.
• B) forming a joint venture.
• C) forming an S-corporation.
• D) merging with a company with the necessary expertise.
• E) starting a cooperative.

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Definitions:

Variable Overhead

Indirect production costs that fluctuate with the level of production output, such as utilities for the manufacturing plant.

Labour Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, based on the standard rate times the actual hours worked.

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity level, allowing for more accurate budgeting and analysis.

Standard Costing

A cost accounting system that uses pre-determined costs to value the cost of goods sold and assess the performance.