Werner Brothers, Inc

question 8

Multiple Choice

Werner Brothers, Inc., used the high-low method to derive its cost formula for electrical power cost. According to the cost formula, the variable cost per unit of activity is $2 per machine-hour. Total electrical power cost at the high level of activity was $9,400 and at the low level of activity was $9,000. If the high level of activity was 2,200 machine hours, then the low level of activity was:

• A)1,800 machine hours
• B)1,900 machine hours
• C)2,000 machine hours
• D)1,700 machine hours

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Definitions:

Outsourcing Decision

The process by which a company decides whether to allocate specific operational tasks or processes to external vendors rather than completing them internally.

Design Phase

A preliminary stage in the development process where the specifications, features, and requirements of a project are defined.

Supply Chain Function

The activities and operations involved in moving a product from the supplier to the customer.

Supply Chain Profitability

The overall financial gain achieved throughout the supply chain, from suppliers to end consumers.