The Upper Limit and Lower Specifications for a Service Are

question 153

Multiple Choice

The upper limit and lower specifications for a service are 5.0 min.and 3.0 min.,respectively.The process standard deviation is 0.4 min.and the process average is 4.0 min.What conclusion can be drawn?

• A) The process is capable.
• B) No out-of-spec. services will be performed.
• C) The process is not capable.
• D) The specifications should be changed to 4.2 and 3.8 respectively.

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Definitions:

Direct Labour Cost

The expense associated with workers who are directly involved in the production of goods or services, distinguished from indirect labor costs like supervision and maintenance.

Predetermined Overhead Rate

An estimated charging rate used to apply manufacturing overhead costs to produced units, based on a selected activity base.

Predetermined Overhead Rate

A predetermined rate employed to allocate estimated manufacturing overhead costs to products, calculated before the period starts, using projected costs and activity levels.

Direct Labour Hour

A measure of labor that directly contributes to the production of goods, used in calculating labor costs and efficiency.