Variability in Manufacturing Can Occur Because Engineering Drawings or Specifications

question 68

True/False

Variability in manufacturing can occur because engineering drawings or specifications are incomplete or inaccurate.

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Definitions:

Discretionary Fixed Costs

Those fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research.

Committed Fixed Costs

Expenses that a company has to pay regardless of its level of production or sales, such as leases and long-term contracts, which cannot be easily changed in the short term.

Unit Fixed Cost

The fixed cost associated with producing one unit of a product, which does not vary with the level of production output.

Total Fixed Cost

The sum of all expenses that remain constant regardless of the level of production or sales activities, such as rent, salaries, and insurance premiums.