Long Term Contracts with Suppliers Can Help a Firm with Which

question 28

Multiple Choice

Long term contracts with suppliers can help a firm with which of the following?

• A)Manufacture all needed inputs internally
• B)Acquire upstream firms in the vertical chain
• C)Acquire downstream firms in the vertical chain
• D)Counteract raw material price fluctuations and eliminate income risk
• E)None of the above

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Definitions:

Manufacturing Overhead

Indirect costs associated with manufacturing, including expenses related to operating the factory like utilities, depreciation, and maintenance.

Machine-Hours

A metric indicating the cumulative operational duration of machinery within a specified time frame, often utilized in calculating overhead rates.

Predetermined Overhead Rate

A rate calculated before the period begins by dividing the estimated total overhead costs by an estimated allocation base, used to assign overhead costs to products or job orders.

Manufacturing Cost

The total expense incurred in the process of producing goods, including raw materials, labor, and overhead.