Steve Has Found That There Are a Large Number of Suppliers

question 65

Multiple Choice

Steve has found that there are a large number of suppliers for a particular component he needs for his production.Steve:

• A)has a strong bargaining position
• B)has a weak bargaining position
• C)will pay a higher price for the part
• D)will get low quality parts
• E)will get high-cost and high quality parts

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Definitions:

Profit

The financial surplus remaining after all operating expenses, taxes, and costs have been deducted from total revenue.

Factory Overhead Applied

The allocation of indirect manufacturing costs to produced goods based on estimated or predetermined rates.

Predetermined Factory Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs based on a selected activity base to individual products.

Actual Activity Base

A measure used to allocate costs based on the actual level of activity or usage, often used in budgeting and accounting.