In a Decision Relating to the Possible Elimination of a Department

question 13

Multiple Choice

In a decision relating to the possible elimination of a department consideration would need to be given to how many of the following factors?
Alternative uses of the space currently occupied by the department
Adverse effect of the elimination of sales of other departments
Whether all of the direct operating expenses are avoidable

• A) 0
• B) 1
• C) 2
• D) 3

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Definitions:

Direct Labor-Hours

A unit of measure for the time workers spend producing goods or services, indicative of the labor cost attributed per hour.

Variable Overhead

Costs that vary with production volume, such as utilities or materials, as opposed to fixed overhead costs.

Direct Materials

Raw materials that can be directly attributed to the production process of specific goods or services.

Direct Labor-Hours

A measure of the work done by production workers, calculated in hours.