Which of the Following Best Explains the Concept of 'Offshoring

question 5

Multiple Choice

Which of the following best explains the concept of 'offshoring'? 

• A) Transferring activities that were previously conducted in-house, to a third party. 
• B) Transferring activities that were previously conducted in-house, to a provider in a low-cost country. 
• C) Transferring activities that were previously externally, to another third party. 
• D) Transferring activities from one section of the organization to another.

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Definitions:

Factory Rent

The cost associated with leasing a facility used for manufacturing or production purposes.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products or job orders, based on estimated costs and activity levels.

Machine Hours

A measure of production activity or cost allocation based on the number of hours a machine is operated.

Overapplied Overhead

Refers to the situation where the allocated overhead cost is more than the actual overhead incurred by a business.