Which of the Following Is a Disadvantage of Exporting as a Mode

question 144

Multiple Choice

Which of the following is a disadvantage of exporting as a mode of entry into foreign markets?

• A) The exporting firm incurs the costs of establishing manufacturing operations in the host country.
• B) The firm is unable to realize curve economies through exporting.
• C) High transport costs can make exporting uneconomical, particularly for bulk products.
• D) The firm cannot use countertrading options when exporting.
• E) A firm may not realize substantial scale economies from its global sales volume via exporting.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (or standard) variable overhead based on the predetermined rate.

Variable Manufacturing Overhead

Production costs that change in proportion to the level of production activity, including items such as indirect labor costs.

Actual Direct Labor Cost

The actual amount spent on wages for workers who are directly involved in producing goods or providing services.

Variable Overhead Efficiency Variance

The difference between the actual and the standard (or expected) variable overhead costs based on the efficient use of the variable inputs.