The Optimum Level of Inspection Is Where The

question 141

Multiple Choice

The optimum level of inspection is where the:

• A) cost of inspection is minimum.
• B) cost of passing defectives is minimum.
• C) total cost of inspection and defectives is maximum.
• D) total cost of inspection and defectives is minimum.
• E) difference between inspection and defectives costs is minimum.

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Definitions:

Variable Manufacturing Overhead

Costs that vary with the level of production output, such as utilities for machinery, that are associated with the manufacturing process.

Direct Labor-Hours

The measure of the amount of time workers spend directly producing goods or services, important in calculating labor expenses and production efficiency.

Fixed Manufacturing Overhead

Represents the set of costs that are required to operate a manufacturing facility, which do not vary with the volume of production.

Job-Order Costing System

A cost accounting system that assigns costs to specific production batches or jobs.