The Following Information Relates to a Company's Aggregate Production Planning

question 64

Multiple Choice

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 50 workers
Production per Employee = 250 units per quarter
Hiring Cost = $1000 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $15 per unit per quarter
If a level production strategy is used then the total cost of the plan (hiring cost,firing cost and inventory carrying cost) is

• A)$120,000.
• B)$377,500.
• C)$675,000.
• D)$795,000.

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Definitions:

Variable Costs

Expenses that fluctuate based on the amount of products or services a company generates.

Net Income

Net Income is the total profit of a company after all expenses and taxes have been deducted from revenue.

Variable Costs

Costs that vary in proportion to the level of production or business activity.

Fixed Costs

Expenses that do not change with the amount of goods or services produced over a short period.