Of the Four Approaches to Capacity Expansion, the Approach That

question 79

Multiple Choice

Of the four approaches to capacity expansion, the approach that "straddles" demand:

• A) uses incremental expansion.
• B) uses one-step expansion.
• C) sometimes leads demand, and at other times lags.
• D) works best when demand is not growing but is stable.
• E) Choices A and C are both correct.

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Definitions:

Direct Labor

The wages and benefits paid to workers who are directly involved in the production of goods or services.

Prime Costs

The combined costs of direct materials and direct labor that are directly involved in the production of goods.

Direct Materials Costs

Costs that are directly traceable to the production of specific goods or services, such as raw materials used.

Direct Labor Costs

Expenses related to employees who directly contribute to the production of goods or services, such as wages for assembly line workers.