Which of the Following Statements Is True About Outsourcing Production/manufacturing

question 2

Multiple Choice

Which of the following statements is true about outsourcing production/manufacturing and new ventures?

• A) The use of third-party manufacturers is commonplace
• B) Outsourcing production/manufacturing saves significant capital for the venture
• C) The third-party contractor gains access to the intellectual capital of the new venture
• D) All the above are true

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Definitions:

Net Operating Income

The income from a company's primary business operations, excluding deductions of interest and taxes.

Fixed Expenses

Costs that do not change with the level of production or sales over a short period of time, such as rent or salaries.

Break-Even Point

The level of production or volume of sales at which total costs and total revenue are equal, resulting in no net loss or gain.

Variable Expenses

Variable expenses fluctuate with business activity levels, such as materials and labor costs, which increase as production increases.