A Production Process Is Known to Produce a Particular Item

question 73

Multiple Choice

A production process is known to produce a particular item in such a way that 5 percent of these are defective.If two items are randomly selected as they come off the production line, what is the probability that both are defective (assuming that they are independent) ?

• A)0.0100
• B)0.1000
• C)0.2000
• D)0.0025

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Definitions:

Product Cost

The total of costs directly attributed to the production of a product, including materials, labor, and manufacturing overhead.

Contribution Margin

A metric that represents the amount of revenue from sales that exceeds the total variable costs associated with producing those sales.

Machine Hours

A measure of the amount of time a machine is operated during a given period, used for allocating manufacturing costs to products or activities.

Bottleneck Process

A stage in a process that limits the total output because it has a lower capacity than other parts of the process.