Which of the Following Is NOT a Reason Why Capacity

question 83

Multiple Choice

Which of the following is NOT a reason why capacity decisions are considered strategic?

• A)Capacity decisions affect an organization's ability to meet future demand.
• B)Capacity decisions have an impact on operating costs.
• C)Capacity decisions can require a major capital investment.
• D)Capacity decisions are heavily regulated by the government.

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Definitions:

First-In, First-Out

An inventory valuation method where the first items purchased or manufactured are the first to be sold, impacting the cost of goods sold and inventory valuation.

Perpetual System

An inventory accounting system that continuously updates inventory records and cost of goods sold after each purchase or sale.

Factory Overhead

Refers to indirect manufacturing costs, including expenses related to operating the factory environment, such as rent, insurance, and salaries for administrative personnel.

Machine Hours

A measure of production time or usage, indicating the total hours that machinery is operated in the manufacturing process.