When a Firm Adopts a Lean Manufacturing Operating Environment

question 68

Multiple Choice

When a firm adopts a lean manufacturing operating environment,

• A) new,more efficient machinery and equipment must be purchased and installed in the original layout
• B) machinery and equipment are moved into small autonomous production lines called manufacturing cells
• C) new machinery and equipment must be purchased from franchised JIT dealers
• D) employees are retrained on different equipment but the plant layout generally stays unchanged

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Definitions:

Direct Costs

Direct costs are expenses that can be directly traced to the production of a specific good or service, without any allocation.

Delivery Expenses

Costs associated with the transport of goods from the seller to the buyer, which can include freight, packaging, and handling fees.

Indirect Expenses

Costs that are not directly tied to the production of goods or services, such as administrative salaries, rent, and utilities.

Cost Center

A business unit or department within an organization that does not directly generate revenue but incurs costs, and its performance is evaluated based on cost control.