Consider the Following Two Activities: Performing Warranty Work and Purchasing

question 119

Multiple Choice

Consider the following two activities: performing warranty work and purchasing components. The warranty work costs $60,000, and the warranty cost of the most efficient competitor is $10,000. Purchasing components costs $100,000 (5,000 purchase orders) . A study reveals that the most efficient level would use 2,500 purchase orders and entail a cost of $55,000. What is the non-value-added cost?

• A) $45,000
• B) $55,000
• C) $60,000
• D) $105,000

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Definitions:

NFL

The National Football League, a professional American football league consisting of 32 teams.

Standard Error

The standard deviation of the sampling distribution of a statistic, used to estimate the precision of a sample mean relative to the true population mean.

Correlation

A statistical measure that describes the extent to which two variables change together, but does not imply causation.

PassYds

Abbreviation for Passing Yards, a statistic in football that measures the distance in yards gained from passing plays.