Decision Variables

question 17

Multiple Choice

Decision variables:

• A) cannot be directly controlled by the decision maker.
• B) are assumed to be constant.
• C) are always uncertain.
• D) can be selected at the discretion of the decision maker.

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Definitions:

Practical Capacity

The maximum amount of work that can realistically be achieved in a production process, accounting for unavoidable disruptions like maintenance and downtime.

Budgeted Capacity

The amount of production volume planned for a period, which is used for budgeting and planning purposes.

Overhead Costs

General business expenses that are not directly attributable to creating a product or service but are necessary for the business's functioning.

Cost Drivers

Factors that cause the cost of an activity or product to increase or decrease, influencing overall expenses.