The Cost Components of a Heater Include $35 for the Compressor

question 70

Multiple Choice

The cost components of a heater include $35 for the compressor, $12 for the sheet molded compound frame, and $80 per unit for assembly.The factory machines and tools fixed cost is $55,000.The company expects to produce 1,500 heaters in the coming year.What cost function best represents these costs?

• A)y = 1,500 + 127X
• B)y = 1,500 + 55,000X
• C)y = 55,000 + 1,500X
• D)y = 55,000 + 127X
• E)y = 55,080 + 47X

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Definitions:

Push Production

A manufacturing process where products are made based on predicted demand and pushed to the market, as opposed to being pulled by actual demand.

Just-In-Time

A production strategy that aims to reduce times within the production system as well as response times from suppliers and to customers by receiving goods only as they are needed in the production process, thereby reducing inventory costs.

Work in Process Inventory

Items that are in the process of being manufactured but are not yet complete, often tracked for cost accounting purposes.

Cost of Goods Sold

The straight costs associated with producing the goods that a company sells, which include labor and materials.