5. Which one of the following statements about capacity cushions is best? A Companies with flexible flow processes tend to have smaller capacity cushions. B. Companies with high capital costs tend to have larger capacity cushions C. Companies that have considerable customization tend to have larger capacity cushions D. Constant demand rates require larger capacity cushions 6. Zap Electric Manufacturing makes construction components for home wiring. Their newest product is a receptacle that will use LED light bulbs. Ellie Duncan is in charge of getting the production up and running. Her investigation has revealed some key factors: The cost of renting the machinery is $9,200 per month. The variable cost of producing the component is $.70 per unit. The planned retail price is $.90 per unit How many units must be produced and sold to breakeven? (sep=FC (r-V)) A 126,000 B. 46,000 C 33,000 D. 18,400 Process Management 7. A job shop should be preferred when: A workforce and equipment are specialized B. products are made to stock type. C. customization is high and volume is low. D. customization is low and volume is high. 8. What are some advantages of continuous processing? A The system can accommodate variety and customization B. Efficiency and volume can be very high. C. The cost of downtime is relatively low. D. The system can be changed easily.
5. Which one of the following statements about capacity cushions is best? A Companies with flexible flow processes tend to have smaller capacity cushions. B. Companies with high capital costs tend to have larger capacity cushions C. Companies that have considerable customization tend to have larger capacity cushions D. Constant demand rates require larger capacity cushions 6. Zap Electric Manufacturing makes construction components for home wiring. Their newest product is a receptacle that will use LED light bulbs. Ellie Duncan is in charge of getting the production up and running. Her investigation has revealed some key factors: The cost of renting the machinery is $9,200 per month. The variable cost of producing the component is $.70 per unit. The planned retail price is $.90 per unit How many units must be produced and sold to breakeven? (sep=FC (r-V)) A 126,000 B. 46,000 C 33,000 D. 18,400 Process Management 7. A job shop should be preferred when: A workforce and equipment are specialized B. products are made to stock type. C. customization is high and volume is low. D. customization is low and volume is high. 8. What are some advantages of continuous processing? A The system can accommodate variety and customization B. Efficiency and volume can be very high. C. The cost of downtime is relatively low. D. The system can be changed easily.
Answer
Question – 5:
Answer is: (C) Companies that have considerable
customization tend to have larger capacity
cushions.
Reason: Capacity cushion is having a
buffer of extra capacity so as to meet the demand. If the
customization is high, then the capacity cushion also should be
high in order to avoid any problem during execution.
Why other options are incorrect:
Flexible flow process requires a capacity cushion of higher
degree
Capital cost has nothing to do with the capacity cushion
Constant demand means no capacity cushion required.
Question – 6:
Answer is: (B) 46000
Calculations:
Here,
Fixed cost = $9,200
Variable cost = $0.70 per unit
Retail price = $0.90 per unit.
At breakeven, the profit = 0
Total revenue – Total cost –= 0
Total Revenue – (fixed cost + variable cost total) = 0
Let the breakeven unit = x
0.90*x – (9200 + 0.7*x) = 0
0.2*x – 9200 = 0
0.2*x = 9200
x = 9200/0.2 = 46000
so the breakeven point is 46000
Question – 7:
Answer is: (C) Customization is high and volume is
low
Reason: Job shops are small
manufacturing systems. When the volume is low and customization
required is high, it should be preferred so as to lower the overall
cost.
The other options are irrelevant to job shop. Hence
incorrect.
Question – 8:
Answer is: (B) Efficiency and volume can be very
high
Reason: In continuous flow process the
whole system is continuous processing the same thing at large
volume. Hence the volume is high. The process is continuous. So the
output is much more as compared to the capacity ratio. So the
efficiency is also high.
Why other options are incorrect:
As the system is continuous and goes on with only the same type
of processing, the customization is not easy.
Cost of downtime is high because the whole process will stop for
one error.
System cant be changed easily as it is meant for same type of
work continuously.
.
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