QUESTION 3 Scheduling different levels of production each month to maintain a re
ID: 2521019 • Letter: Q
Question
QUESTION 3
Scheduling different levels of production each month to maintain a relatively stable inventory could lead to all but:
idle production capacity in some months.
leasing additional warehouse space to store finished goods.
running a second or third shift during some months.
inefficiencies from hiring inexperienced workers to meet heavy production schedules.
QUESTION 4
When preparing the flexible budget for factory overhead, variable costs may include all but the following:
insurance
shop supplies
electricity to run the machines
repair costs
idle production capacity in some months.
leasing additional warehouse space to store finished goods.
running a second or third shift during some months.
inefficiencies from hiring inexperienced workers to meet heavy production schedules.
QUESTION 4
When preparing the flexible budget for factory overhead, variable costs may include all but the following:
insurance
shop supplies
electricity to run the machines
repair costs
Explanation / Answer
Q3.
Answer is Idle production capacity in some months.
This may be due to fluctuation in sales that sometimes the production capacity remain idle as sufficient inventory is maintained and sales may be low due to market and seasonal fluctuations. This result in lower production resulting in idle capacity.
Q4.
Answer is Insurance.
Explanation: Insurance cost is a fixed cost and has nothin to do with the level of activity.
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