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:

Accelerated Depreciation

A depreciation method that expenses asset cost more rapidly in the initial period of its life.

Tax Purposes

The specific reasons or considerations for calculations or filings as required by tax laws.

Impairment Tests

Assessments to determine if an asset's carrying amount exceeds its recoverable amount, indicating a loss in value.

Fair Value

A measure of the estimated price at which an asset or liability could be traded in a transaction between willing parties, other than in a liquidation sale.