What Is a Common Method Used to Increase Capacity with a Lag

question 74

Multiple Choice

What is a common method used to increase capacity with a lag strategy?

• A)overtime
• B)subcontracting
• C)new facilities
• D)new machinery
• E)A and B

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Definitions:

Short-Run Decision Making

The process of making business decisions that are immediate or temporary, focusing on situations that do not alter the fixed costs.

Operating Leverage Factor

A ratio that measures the proportion of fixed costs to total costs, indicating how a change in sales volume impacts profitability.

Sales Volume

The quantity of products or services sold by a business during a specific period, often used as an indicator of business performance.

Cost Structure

The composition of a company's costs, including the proportion of fixed versus variable costs incurred in its operations.