An Advantage of Buying Component Parts, or Even an Entire

question 68

Multiple Choice

An advantage of buying component parts, or even an entire product, from independent suppliers is that:

• A) it can make planning, coordination, and scheduling of adjacent processes easier for the firm.
• B) the firm can maintain its flexibility by switching orders according to circumstances.
• C) the firm will be able to maintain strict control over its proprietary technology.
• D) the firm will have access to superior quality raw materials and will deliver high quality products.

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Definitions:

Amortized

Relates to spreading payments over multiple periods to gradually eliminate a liability or loan, incorporating both principal and interest components.

Compounded Semiannually

The calculation of interest where the interest earned over a period is added to the principal, and the process is repeated twice a year.

Gross Debt Service Ratio

A financial ratio that compares an individual's monthly housing costs (including mortgage payments, property taxes, and utilities) to their gross monthly income, used by lenders to assess borrowing capacity.

Gross Monthly Income

The total amount of income earned in a month before taxes and deductions.