Management Is Interested in Utilizing the Full Capacity of Production

question 42

Multiple Choice

Management is interested in utilizing the full capacity of production facilities because it

• A)spreads variable costs over a greater number of units, thereby reducing the variable cost per unit.
• B)spreads fixed costs over a greater number of units, thereby reducing the fixed cost per unit.
• C)reduces total variable costs.
• D)reduces total fixed costs.

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Definitions:

Product Failure Rate

The frequency at which a product fails within a specified period, often used as an indicator of product reliability.

Full Cost View

An accounting approach that considers all direct and indirect costs involved in producing a product or service.

Breakdown Maintenance

Remedial maintenance that occurs when equipment fails and must be repaired on an emergency or priority basis.

Traditional View

A perspective that prioritizes established practices and views, often resistant to change and innovation in various contexts.