The Following Information Relates to a Company's Aggregate Production Planning

question 103

Multiple Choice

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 50 workers
Production per Employee = 250 units per quarter
Hiring Cost = $1000 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $15 per unit per quarter
If a chase demand strategy is used then the total hiring and firing cost of the plan is

• A) $340,000.
• B) $250,000.
• C) $125,000.
• D) $90,000.

---

Definitions:

Variances

The differences between planned or expected financial outcomes and the actual financial outcomes.

Fixed Overhead

The portion of overhead costs that remains constant regardless of the level of production or business activity.

Direct Labor

The labor costs directly tied to the production of goods or services, such as wages paid to employees who physically produce a product.

Raw Material

Fundamental components and elements employed at the beginning of the manufacturing or production process.