Why Is It Dangerous to Justify Capacity Expansion Using Economies

question 10

Multiple Choice

Why is it dangerous to justify capacity expansion using economies of scale?

• A)It is far too specific to use as a basis for capacity decisions
• B)Because volume,capacity,and process considerations are looked at individually
• C)Because the common notion that unit costs decline for larger facilities due to size is not always accurate
• D)It requires consideration of quality,dependability,and flexibility

---

Definitions:

Single-Entry Bookkeeping System

An accounting method in which each financial transaction is recorded only once in account books; similar to a checkbook register; the journal for each transaction is recorded in one column, or on a single line, to account for either a positive or negative amount to demonstrate the receipt or disbursement of cash.

Checkbook Register

A record of all deposits, withdrawals, checks, and transactions made through a checking account.

Cash Control Sheet

A financial document used to track the inflow and outflow of cash within a business to ensure accurate accounting and prevent fraud.

Pegboard System

An organizational tool consisting of a board with holes that can hold pegs or hooks for the purpose of hanging or displaying items.