An Organization Pursuing a Low-Cost Strategy Is Most Likely to Use

question 24

Multiple Choice

An organization pursuing a low-cost strategy is most likely to use which of the following technologies?

• A) Craftswork
• B) Nonroutine research
• C) Engineering production
• D) Routine manufacturing

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Definitions:

Lessor

An entity or individual that owns an asset and grants another party the right to use that asset in exchange for periodic rental payments.

Capital Lease

A lease classified by the lessee as an asset and liability on the balance sheet because it effectively transfers substantially all risks and rewards of ownership to the lessee.

Executory Costs

These are costs associated with fulfilling the terms of a contract, excluding the direct material and direct labor costs, such as utilities, insurance, and property taxes involved in leasing.

Bargain Purchase Option

A lease provision allowing the lessee to purchase the leased asset at the end of the lease term at a price significantly lower than the expected fair market value.