Compared to Making a Product or Component, Buying It Has

question 20

Multiple Choice

Compared to making a product or component, buying it has the advantage of:

• A) guaranteed source of supply.
• B) greater specialization of your own business.
• C) direct control of quality.
• D) direct control of delivery.

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Definitions:

Income Statement

A financial statement that reports a company’s financial performance over a specific accounting period.

Manufacturing Margin

The difference between the cost of goods produced and the sales revenue from those goods, indicating the profitability of manufacturing activities.

Contribution Margin

The difference between sales revenue and variable costs, used to cover fixed costs and contribute to profits.

Gross Margin

The financial metric representing the difference between revenue and the cost of goods sold, divided by revenue, often expressed as a percentage. It indicates how efficiently a company is using its resources to produce goods.