Violet Company Has Five Process Engineers, and Each of Them

question 112

Multiple Choice

Violet Company has five process engineers, and each of them can process 2,500 design changes. Last year 5,000 design changes were processed by the five engineers. Each engineer is paid $50,000 per year. Calculate the unused capacity.

• A)7,500 change orders
• B)3,500 change orders
• C)4,500 change orders
• D)6,500 change orders

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Definitions:

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold, including expenses like rent, salaries, and insurance fees.

High-low Method

A technique in cost accounting used to estimate fixed and variable costs by analyzing the highest and lowest levels of activity and their respective costs.

Variable Cost Per Unit

The cost that varies with the level of output or production, calculated on a per-unit basis.

Fixed Costs

Expenses that remain constant for a business regardless of the level of production or sales volume.