Which of the Following Definitions on Layout Is NOT Correct

question 117

Multiple Choice

Which of the following definitions on layout is NOT correct?

• A) Absolute location refers to a factor that is so important that it absolutely must be satisfied.
• B) Relative location is normally the crucial issue when travel time, materials handling costs, and communication effectiveness are important.
• C) An economic activity center can be anything that consumes space: a person, a machine, a stairway, and so on.
• D) Layout planning involves decisions about the physical arrangement of economic centers within a facility.

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Definitions:

Fixed Manufacturing Cost

Costs that remain constant regardless of the level of production, such as rent, salaries, and maintenance expenses.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including depreciation, utilities, and salaries for supervisors.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the profitability of a company's core activities excluding overhead.

Contribution Margin

The amount of revenue remaining after variable costs have been deducted, which contributes to covering fixed costs and generating profit.