Consider the Estimated Aggregate Demand for a Company's Ski Product

question 46

Multiple Choice

Consider the estimated aggregate demand for a company's ski product line for the upcoming year in the following table.Calculate the firing cost for month of February using the chase production strategy.The average number of hours required to produce a pair of skis is 8 hours,and the number of worker hours per month is 160.The current workforce is 100.The firing cost per worker is $200. $$\begin{array} { | c | c | c | c | } \hline \text { Month } & \begin{array} { c } \text { Demand } \\\text { (in pairs } \\\text { of unit) }\end{array} & \text { Month } & \begin{array} { c } \text { Demand } \\\text { (in pairs } \\\text { of units) }\end{array} \\\hline \text { J an } & 8,000 & \text { J uly } & 1,000 \\\hline \text { Feb } & 7,000 & \text { Aug } & 1,300 \\\hline \text { Mar } & 5,000 & \text { Sept } & 2,000 \\\hline \text { Apr } & 4,000 & \text { Oct } & 3,000 \\\hline \text { May } & 2,000 & \text { Nov } & 5,700 \\\hline \text { J une } & 2,000 & \text { Dec } & 7,000 \\\hline\end{array}$$

• A)$12,000
• B)$15,000
• C)$20,000
• D)$10,000

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Definitions:

Variable Costs

Variable costs are expenses that change directly and proportionally with the level of production or business activity, such as raw materials and direct labor costs.

Direct Materials

Raw materials that are directly incorporated into a final product and can be easily traced to it.

Fixed Costs

Fixed costs are business expenses that do not change with the level of goods or services produced by the business, such as rent, salaries, or loan payments.

Flexible Budget

A flexible budget adjusts to changes in actual revenue or activity levels, allowing for more accurate comparisons and performance assessments.