What Effects Would Automating a Production Line Have on a Company's

question 138

Essay

What effects would automating a production line have on a company's cost structure using CVP terminology? Could these changes have any negative effect on the firm?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

---

Definitions:

Overhead Costs

Overhead costs are expenses related to the operation of a business that cannot be directly attributed to a specific product or service, such as rent and utilities.

Machine Setups

The process of preparing and adjusting machines for a specific production task, which can influence production efficiency and costs.

Relevant Range

The range of activity within which the assumptions about fixed and variable costs are valid.

Variable Cost

A rephrased definition: Costs that fluctuate with the level of activity or output, such as cost of raw materials used in production.