How Can a Reduction of In-Transit Inventory Be Encouraged

question 120

Multiple Choice

How can a reduction of in-transit inventory be encouraged?

• A) supplier location near plants
• B) high setup costs
• C) low carrying costs
• D) use of trains, not trucks
• E) low-cost, global suppliers

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Definitions:

Controllable Variance

The difference between actual expenses and budgeted expenses that management has the power to influence or control.

Factory Overhead

All indirect costs associated with manufacturing, such as utilities, maintenance, and salaries of non-direct labor, which are not directly attributed to the production of goods.

Variable Factory Overhead

Costs in the manufacturing process that fluctuate with production volume, such as materials and labor directly involved in production.

Controllable Variance

The difference between actual costs and budgeted costs that a manager has direct control over in a given period.