If JIT Manufacturing Is Used and Each Manufacturing Cell Produces

question 60

Multiple Choice

If JIT manufacturing is used and each manufacturing cell produces a single product, which of the following is considered a direct product cost?

• A)inspection costs
• B)materials
• C)setup costs
• D)all of these

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Definitions:

Variable Cost

A cost that depends on the quantity of output produced; the cost of a variable input.

Average Total Cost

This is the sum of all the costs of production (fixed and variable) divided by the number of units produced, providing a comprehensive understanding of production expenses.

Market Price

The price at which a good or service is offered in the marketplace, determined by supply and demand.

Economic Profit

The difference between the total revenue received from the sale of an output and the total opportunity costs of the inputs used.