Benchmarking Involves (1) Identifying Best Practice, (2) Studying It in Detail

question 72

Multiple Choice

Benchmarking involves (1) identifying best practice, (2) studying it in detail and then (3) planning to copy the best practice. Which statements are correct?

• A) Statements 1 and 3
• B) Statements 2 and 3
• C) Only statement 1
• D) Statements 1 and 2

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Definitions:

Factory Overhead Cost

All of the costs of producing a product except for direct materials and direct labor.

Normal Capacity

The average level of operational output or activity that a company can sustain over a long period, considering fluctuations in demand and maintenance schedules.

Cost Variance

The difference between the actual cost and the standard or planned cost in a budget.

Standard Cost

A predetermined cost of manufacturing, selling, or any other business activity, used for budgeting and performance evaluation.