Decentralizing Value Chain Activities Lessens the Control That a Firm

question 9

True/False

Decentralizing value chain activities lessens the control that a firm has over cost, quality, and other important business metrics, and often leads to higher levels of risk.

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Definitions:

Overapplied

Refers to a situation where the amount of overhead allocated to products or jobs is more than the actual overhead incurred.

Underapplied

Underapplied refers to a situation where the allocated costs are less than the actual costs incurred, often relating to overhead in manufacturing.

Direct Labor-Hours

A measure of the amount of time workers spend on production, often used as a basis for allocating overhead costs in traditional costing systems.

Applies Overhead

Refers to the method by which manufacturing overhead costs are assigned to products or job orders based on a predetermined rate or basis.