Businesses Typically Act as Both Buyers and Suppliers

question 121

Multiple Choice

Businesses typically act as both buyers and suppliers.Which of the following is true regarding the goal of a company as a supplier organization in an industry?

• A)Buyer power and supplier power should be low.
• B)Buyer power should be low and supplier power should be high.
• C)Buyer power should be high and supplier power should be low.
• D)Buyer power and supplier power should be high.

---

Definitions:

Standard Variable Overhead Rate

The predetermined rate at which variable overhead costs are expected to be incurred relative to a certain measure of activity, such as labor hours.

Direct Labour Hours

Direct Labour Hours represent the amount of time spent by workers directly involved in manufacturing a product or providing a service.

Variable Overhead

Indirect operating costs that change in proportion to the level of production or business activity.

Total Variable Overhead Variance

The difference between the actual variable overhead incurred and the standard variable overhead allocated for the output achieved.