A Computer Maker Who Decides to Manufacture Its Own Monitors

question 110

Multiple Choice

A computer maker who decides to manufacture its own monitors and printers is engaging in ________.

• A) outsourcing
• B) vertical integration
• C) transfer pricing
• D) lower risk technique

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Definitions:

Overhead Cost

Represents the expenses not directly tied to the production of goods or services, including rent, utilities, and administrative costs.

Direct Labor Cost

The cost of wages and benefits for employees who are directly involved in manufacturing a product or delivering a service.

Manufacturing Overhead

All indirect costs associated with the production process, excluding direct materials and direct labor costs.

Job Cost Sheet

A job cost sheet is a document that records the costs associated with a specific job or batch, tracking materials, labor, and overhead.