If the Upper and Lower Specification Limits of a Process

question 83

Multiple Choice

If the upper and lower specification limits of a process are .852 and .828,respectively,and the process standard deviation is .002,then the process capability index C_p is

• A) .024
• B) 2.000
• C) -2.000
• D) 12.000

---

Definitions:

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been deducted, indicating how much contributes to fixed costs and net profit.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating the amount each unit contributes to covering fixed costs and generating profit.

Degree of Operating Leverage

A financial ratio that measures the percentage change in operating income in response to a percentage change in sales.

Forecasted Contribution Margin

An estimated metric that indicates the difference between sales revenue and variable costs of goods sold, used to predict the profitability of sales.