In Volume-Based Tailored Sourcing

question 78

Multiple Choice

In volume-based tailored sourcing,

• A)the predictable part of a product's demand is produced at an efficient facility.
• B)the uncertain portion is produced at an efficient facility.
• C)the predictable part of a product's demand is produced at a flexible facility.
• D)the predictable part of a product's demand is outsourced.

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Definitions:

Materials Price Variance

The difference between the actual cost of direct materials and the expected (standard) cost multiplied by the actual quantity purchased or used.

Labour Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost.

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity level of a business.