If a Supplier Has High Power, What Can It Do

question 88

Multiple Choice

If a supplier has high power, what can it do to influence its industry?

• A)charge higher prices
• B)shift costs to industry participants
• C)limit quality or services
• D)All of these are correct.

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Definitions:

Direct Labor

The cost associated with workers who are directly involved in the production of goods or services.

GAAP

Generally Accepted Accounting Principles; a set of rules and standards used for financial reporting and accounting.

Cost Flow Assumption

An assumption about how costs are removed from inventory and reported as cost of goods sold, influencing how inventory and profits are accounted for.

Variable Costing

An accounting method that only includes variable costs in product costs and treats fixed costs as period expenses.