Question 1

Consider the following information: $$\begin{array} { l l } 
\text { Fixed Costs: } & \$ 15,000 \text { per year } \
\text { Variable Costs: } & \$ 1.00 \text { per unit } \
\text { Revenue: } & \$ 1.60 \text { per unit } \
\text { Design Capacity: } & 45,000 \text { units per year } \
\text { Effective Capacity: } & 40,000 \text { units per year } \
\text { Anticipated Output: } & 36,000 \text { units per year }
\end{array}$$ What is the break-even quantity (produced and sold)?

Accepted Answer

The answer of Consider the following information: \[\begin{array} { l...

Question 2

In cost-volume analysis, costs that vary directly with volume of output are referred to as fixed costs because they are a fixed percentage of output levels.

Accepted Answer

A) True 
 B)False

Question 3

For fixed costs of $2,000, revenue per unit of $2, and variable cost per unit of $1.60, the break-even quantity is:

Accepted Answer

A)   1,000.
B)   1,250.
C)   2,250.
D)   5,000.
E)   3,000.F) A) and C)
G) B) and C)

Question 4

The method of financial analysis which results in an equivalent interest rate is:

Accepted Answer

A)   payback.
B)   net present value.
C)   internal rate of return.
D)   queuing.
E)   cost-volume.F) B) and E)
G) C) and D)

Question 5

When buying component parts, risk does not include:

Accepted Answer

A)   loss of control.
B)   vendor viability.
C)   interest rate fluctuations.
D)   need to disclose proprietary information.
E)   product liability.F) D) and E)
G) All of the above

Question 6

The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is anticipated to be 35 cords per day, what would be its utilization?

Accepted Answer

A)   100 percent
B)   80 percent
C)   75 percent
D)   70 percent
E)   0 percentF) B) and C)
G) A) and B)

Question 7

Seasonal variations are often easier to deal with in capacity planning than random variations because seasonal variations tend to be:

Accepted Answer

A)   smaller.
B)   larger.
C)   predictable.
D)   controllable.
E)   less frequent.F) C) and D)
G) B) and D)

Question 8

Which of the following is not a basic question in capacity planning?

Accepted Answer

A)   what kind is needed
B)   how much is needed
C)   when is it needed
D)   who will pay for it
E)   what it will be used forF) D) and E)
G) B) and D)

Question 9

The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. If her available land has design and effective capacities of 3,000 and 2,000 rosebushes per year respectively, and she plans to grow 1,200 rosebushes each year on this land, what will be the utilization of this land?

Accepted Answer

A)   0 percent
B)   40 percent
C)   60 percent
D)   67 percent
E)   100 percentF) A) and B)
G) D) and E)

Question 10

Waiting line analysis can be useful for capacity design, especially for service systems.

Accepted Answer

A) True 
 B)False

Question 11

Given the following data for a make-or-buy decision: $$\begin{array} { l l l } 
\text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \
\hline  \text { Buy } & \$ 0 \text { per year } & \$ 8 \text { per unit } \
\text { Make } & \$ 100,000 \text { per year } & \$ 4 \text { per unit }
\end{array}$$ For what range of output would you prefer to buy?

Accepted Answer

The answer of Given the following data for a make-or-buy...

Question 12

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington,

Accepted Answer

A)   0 percent
B)   30 percent
C)   50 percent
D)   60 percent
E)   100 percentF) A) and B)
G) C) and E)

Question 13

Everything else being equal, a firm considering outsourcing can be reasonably certain that:

Accepted Answer

A)   total costs will be lower.
B)   its supplier probably has more expertise in whatever is being outsourced.
C)   it can maintain tight control over knowledge.
D)   proprietary information will not be disclosed.
E)   control over operations will be maintained.F) A) and D)
G) A) and E)

Question 14

The more current capacity exceeds desired capacity, the greater the opportunity for profit.

Accepted Answer

A) True 
 B)False

Question 15

Design capacity refers to the maximum output that can possibly be attained.

Accepted Answer

A) True 
 B)False

Question 16

Suppose operation X feeds directly into operation Y. All of X's output goes to Y, and Y has no other operations feeding into it. X has a design capacity of 80 units per hour and an effective capacity of 72 units per hour. Y has a design capacity of 100 units per hour. What is Y's maximum possible utilization?

Accepted Answer

A)   80 percent
B)   72 percent
C)   90 percent
D)   70 percent
E)   60 percentF) A) and D)
G) B) and E)

Question 17

The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is expected to be 32 cords per day, what would be its efficiency?

Accepted Answer

A)   100 percent
B)   80 percent
C)   75 percent
D)   70 percent
E)   0 percentF) B) and E)
G) C) and D)

Question 18

Increasing capacity just before a bottleneck operation will improve the output of the process.

Accepted Answer

A) True 
 B)False

Question 19

Given the following information, what would efficiency be? Effective capacity = 80 units per day
Design capacity = 100 units per day
Utilization = 48 percent

Accepted Answer

A)   20 percent
B)   35 percent
C)   48 percent
D)   60 percent
E)   80 percentF) A) and E)
G) B) and E)

Question 20

Which of the following would not be a potential upside in a decision to outsource?

Accepted Answer

A)   supplier capacity
B)   potential to lower fixed costs
C)   supplier expertise
D)   knowledge sharing
E)   supplier costF) A) and E)
G) C) and D)

Exam 5: Strategic Capacity Planning for Products and Services

The more current capacity exceeds desired capacity, the greater the opportunity for profit.

Correct Answer
verified

When buying component parts, risk does not include:

Correct Answer
verified

Given the following information, what would efficiency be? Effective capacity = 80 units per day Design capacity = 100 units per day Utilization = 48 percent

Correct Answer
verified

In cost-volume analysis, costs that vary directly with volume of output are referred to as fixed costs because they are a fixed percentage of output levels.

Correct Answer
verified

Correct Answer
verified

Design capacity refers to the maximum output that can possibly be attained.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Which of the following would not be a potential upside in a decision to outsource?

Correct Answer
verified

Correct Answer
verified

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington,

Correct Answer
verified

The method of financial analysis which results in an equivalent interest rate is:

Correct Answer
verified

Correct Answer
verified

Everything else being equal, a firm considering outsourcing can be reasonably certain that:

Correct Answer
verified

Which of the following is not a basic question in capacity planning?

Correct Answer
verified

Correct Answer
verified

Waiting line analysis can be useful for capacity design, especially for service systems.

Correct Answer
verified

For fixed costs of $2,000, revenue per unit of $2, and variable cost per unit of $1.60, the break-even quantity is:

Correct Answer
verified

Increasing capacity just before a bottleneck operation will improve the output of the process.

Correct Answer
verified

Seasonal variations are often easier to deal with in capacity planning than random variations because seasonal variations tend to be:

Correct Answer
verified

Exam 5: Strategic Capacity Planning for Products and Services

The more current capacity exceeds desired capacity, the greater the opportunity for profit.

Correct AnswerverifiedShow Answer

When buying component parts, risk does not include:

Correct AnswerverifiedShow Answer

Given the following information, what would efficiency be? Effective capacity = 80 units per day Design capacity = 100 units per day Utilization = 48 percent

Correct AnswerverifiedShow Answer

In cost-volume analysis, costs that vary directly with volume of output are referred to as fixed costs because they are a fixed percentage of output levels.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Design capacity refers to the maximum output that can possibly be attained.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following would not be a potential upside in a decision to outsource?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington,

Correct AnswerverifiedShow Answer

The method of financial analysis which results in an equivalent interest rate is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Everything else being equal, a firm considering outsourcing can be reasonably certain that:

Correct AnswerverifiedShow Answer

Which of the following is not a basic question in capacity planning?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Waiting line analysis can be useful for capacity design, especially for service systems.

Correct AnswerverifiedShow Answer

For fixed costs of $2,000, revenue per unit of $2, and variable cost per unit of $1.60, the break-even quantity is:

Correct AnswerverifiedShow Answer

Increasing capacity just before a bottleneck operation will improve the output of the process.

Correct AnswerverifiedShow Answer

Seasonal variations are often easier to deal with in capacity planning than random variations because seasonal variations tend to be:

Correct AnswerverifiedShow Answer

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