Firms Sometimes Pursue a Chaining Strategy To

question 63

Multiple Choice

Firms sometimes pursue a chaining strategy to:

• A) obtain the advantages of economies of scale.
• B) create product diversity.
• C) generate revenue by licensing the patents it owns.
• D) spread overhead costs.
• E) establish a number of unrelated business units.

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Definitions:

Manufacturing Overhead

Indirect costs associated with manufacturing, not directly tied to specific product units, such as equipment maintenance, factory rent, and management salaries.

Finished Goods

The final products that have completed the manufacturing process and are ready for sale.

Direct Labour Wage Rate

The hourly rate paid to workers directly involved in the production of goods or services.

Overhead Rate

The ratio of overhead costs to the base cost, used to allocate overhead to products or services.