Quality Chairs Inc In Order to Reduce Costs So as to Reach the Winters

question 49

Multiple Choice

Quality Chairs Inc. (QC) manufactures chairs for industrial use. Laura Winters, the Vice President for Marketing at QC, concluded from market analysis that sales were dwindling for QC's standard three-foot chair due to aggressive pricing by competitors. QC's chairs sold for $550 whereas the competition's comparable chair was selling for $495. Winters determined that a price drop to $495 would be necessary to regain market share and reach a targeted annual sales level of 10,000 chairs.
Cost data based on sales of 10,000 chairs:
$\begin{array}{lcc}&\text { Budgeted } & \text { Actual } \\&\text { Quantity } & \text { Quantity }\\\text { Direct materials (board feet) } & 88,000 & 79,500 & \$ 1,250,000 \\\text { Direct labor (hours) } & 71,350 & 73,775 & 875,000 \\\text { Machine hours (hours) } & 11,400 & 11,250 & 250,000 \\\text { Finishing and packing (hours) } & 6,500 & 6,400 & 125,000\end{array}$ In order to reduce costs so as to reach the desired target cost, Quality Chairs should also focus on reducing the cost of:

• A) Direct materials
• B) Direct labor
• C) Machine setups
• D) Mechanical assembly

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Definitions:

Learned Helplessness Model

A theory that suggests individuals can learn to feel helpless and passive in the face of uncontrollable events, leading to negative outcomes such as depression.

Depression

A mood disorder causing a persistent feeling of sadness and loss of interest, affecting one’s daily functioning.

Serotonin

A neurotransmitter in the brain that plays a key role in stabilizing mood, feelings of well-being, and happiness.

Learned Helplessness

A condition in which an individual becomes passive and unable to act to avoid adverse situations due to previous experiences of being unable to control the outcome.