To Compete in the Automobile Market,Tesla Must Make Many Strategic

question 46

Multiple Choice

To compete in the automobile market,Tesla must make many strategic decisions such as whether to introduce a new car model,how to sell and service its cars,and where to advertise.At Tesla's Fremont,California plant,managers must decide on the monthly production quantities of their S and X models.In making this decision,the managers

• A)face no trade-off because the Fremont plant only produces these two models of the many Tesla models produced worldwide.
• B)face a trade-off,because producing more of one model means producing less of the other.
• C)will choose to only produce the quantity of S and X models where marginal cost equals zero.
• D)will always decide on production quantities in which revenues are maximized.

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Definitions:

Departmental Predetermined Overhead Rates

Overhead rates calculated for specific departments within a manufacturing facility, reflecting the unique costs associated with each department's operations.

Machine-Hours

A measure of the time machines are used in the production process, often used as a basis for allocating overhead costs in a manufacturing environment.

Markup

The amount added to the cost price of goods to cover overhead and profit, expressed as a percentage of the cost.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production.