A Firm Uses Graphical Techniques in Its Aggregate Planning Efforts

question 29

Multiple Choice

A firm uses graphical techniques in its aggregate planning efforts. Over the next twelve months (its intermediate period) , it estimates the sum of demands to be 105,000 units. The firm has 250 production days per year. In January, which has 22 production days, demand is estimated to be 11,000 units. A graph of demand versus level production will show that:

• A) the January requirement is below level production of 420 units.
• B) level production is approximately 1000 units per day.
• C) level production of 420 units per day is below the January requirement.
• D) level production is approximately 420 units per month.
• E) the firm must hire workers between December and January.

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Definitions:

Volume

The quantity of an asset or security that is traded within a specified time period.

Capital Structure

The particular combination of debt and equity used by a company to finance its overall operations and growth.

Cost Structure

The mix of fixed and variable cost used by a firm.

Financial Leverage

Utilizing borrowed funds to amplify the prospective gains of an investment.