A Business May Prefer to Make a Product That It

question 10

Multiple Choice

A business may prefer to make a product that it could subcontract at a cheaper price because:

• A)they may be concerned that having gained their business, the subcontractor could increase the price charged.
• B)by subcontracting the business, they may find supply is less reliable.
• C)by subcontracting the business, they may lose control over quality.
• D)all of the above.

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Definitions:

Delivery Expense

Costs incurred by a business for the transportation or delivery of goods to customers, often classified as an operating expense.

Periodic Inventory System

An inventory accounting system where updates to the inventory accounts occur at specific periods rather than continuously, often requiring a physical count.

Merchandise Inventory

Goods and products that a retailer, wholesaler, or distributor has on hand to sell to customers.

Purchases

In accounting, refers to the acquiring of goods or services that are necessary for the operation of a business or for resale.