Ruggles Circuit Company Manufactures Circuit Boards for Other Firms A)Do Not Change the Production Floor

question 12

Multiple Choice

Ruggles Circuit Company manufactures circuit boards for other firms.Management is attempting to search for ways to reduce manufacturing labour costs and has received a proposal from a consulting company to rearrange the production floor next year.Using the information below regarding current operations and the new proposal,which of the following decisions should management accept?
$$\begin{array} { l r r } & \text { Currently } & \text { Proposed } \\\text { Required machine operators } & 5 & 4.5 \\\text { Materials-handling workers } & 1.25 & 1.25 \\\text { Employee average pay } & \$ 8 \text { per hour } & \$ 9 \text { per hour } \\\text { Hours worked per employee } & 2000 & 2000\end{array}$$

• A)Do not change the production floor.
• B)Rearrange the production floor.
• C)Either,because it makes no difference to the employees.
• D)It doesn't matter because the costs incurred will remain the same.

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Definitions:

Break-even Point

The point at which total revenues equal total costs, meaning the company neither makes a profit nor incurs a loss.

Variable Costs

Costs that vary directly with the level of production or with volume of services provided.

Fixed Costs

Fixed costs are expenses that do not vary with the level of production or sales within a certain range, such as rent, salaries, and insurance.

Automated Machine

A machine operated with minimal human intervention, typically using computer-controlled systems.