When Is Decentralization of Manufacturing Facilities Most Appropriate

question 34

Multiple Choice

When is decentralization of manufacturing facilities most appropriate?

• A)When the product serves universal needs
• B)When exchange rates are expected to remain relatively stable
• C)When the product's value-to-weight ratio is high
• D)When there are few trade barriers
• E)When the production technology has low minimum efficient scale

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor, such as utilities, rent, and salaries for managers.

Direct Labor

The labor costs directly traceable to the production of goods, including wages of workers on the production line.

Factory Overhead

All manufacturing costs that are not directly related to the production of goods, including costs associated with operating the factory.

Overhead Costs

Fixed and variable costs incurred in the operation of a business that do not directly contribute to the production of goods or services.