What type of costs are labor and materials, which vary with the volume of units produced?
Explanation
This question tests the basic definition of variable costs, a critical component required for any break-even analysis.
Other questions
In the context of operations management, what is the definition of capacity?
What are the three time horizons for capacity planning as described in the supplement?
A bakery facility has a design capacity of 201,600 rolls per week and an effective capacity of 175,000 rolls per week. Last week, the facility produced 148,000 rolls. What was the plant's efficiency for the week?
A plant has an effective capacity of 6,500 units and an efficiency of 88 percent. What is the actual (planned) output?
According to the principles of bottleneck management, what happens if you increase the capacity of a nonbottleneck station?
What is the primary objective of break-even analysis?
A firm wants to determine its break-even point. Its fixed costs are $10,000. Direct labor is $1.50 per unit, and material is $0.75 per unit. The selling price is $4.00 per unit. What is the break-even point in dollars?
What is the relationship between bottleneck time and throughput time in a production system?
What are costs that continue even if no units are produced, such as depreciation, taxes, debt, and mortgage payments, called?
Southern Hospital Supplies is considering building a new plant. A large plant would yield a profit of $100,000 with a favorable market but a loss of $90,000 with an unfavorable market. A medium plant would yield a profit of $60,000 with a favorable market and a loss of $10,000 with an unfavorable market. The probability of a favorable market is 0.4. What is the Expected Monetary Value (EMV) of building the medium plant?
What is defined as the process time of the slowest workstation in a production system?
Which of the four approaches to capacity expansion involves acquiring capacity to stay ahead of demand, with new capacity being acquired incrementally at the beginning of multiple periods?
What is the Net Present Value (NPV) of an investment that will generate receipts of $7,000 per year for 5 years, assuming an interest rate of 6 percent? The present value factor for an annuity at 6 percent for 5 years is 4.212.
What is the first step in the five-step process for recognizing and managing constraints according to the Theory of Constraints (TOC)?
A restaurant is analyzing its break-even point for a multiproduct menu. The total fixed cost is $3,000 per month. After weighting the contribution of each item by its sales proportion, the overall weighted contribution is found to be 0.47 for each dollar of sales. What is the annual break-even point in dollars?
A dental cleaning process has two simultaneous paths. The first path through an X-ray exam takes a total of 27 minutes. The second path through hygienist cleaning takes a total of 46 minutes. What is the throughput time for a patient in this system?
If a plant's design capacity is 5,000 units per day, and its actual output is 4,000 units per day, what is its utilization?
Which of the following is NOT one of the four principles of bottleneck management discussed in the text?
A manufacturing process for a machine part has three sequential stations. Station A takes 2 minutes per unit, Station B takes 4 minutes per unit, and Station C takes 3 minutes per unit. What is the throughput time of this system?
An airline wants to develop a c-chart for misplaced bags at a 99.73 percent confidence level. Over the past 6 weeks, the number of misplaced bags has been 18, 10, 4, 6, 12, and 10. What is the upper control limit (UCLc) for this c-chart?
Which of the following is a strategy to manage demand when demand exceeds capacity?
One of the four special considerations for a good capacity decision is to find the optimum operating size, where average cost declines as size increases. What is this phenomenon called?
A sandwich shop has two identical, parallel assembly lines. The bottleneck on each individual line is the toaster, which takes 40 seconds per sandwich. What is the bottleneck time of the combined assembly line operations?
Which financial analysis technique is described as a means of determining the discounted value of a series of future cash receipts?
What is the future value (F) of a present value (P) of $100 after 2 years if the interest rate (i) is 5 percent?
A manager of a decaffeinated coffee producer randomly selects and weighs 8 bottles per sample. For multiple samples, the overall average weight (x-bar-bar) is 4.03 ounces and the average range (R-bar) is 0.505 ounces. Using a factor table, the value for A2 for a sample size of 8 is 0.373. What is the Upper Control Limit for the x-bar chart (UCLx)?
In a multiproduct break-even analysis for a restaurant, what does the weight (Wi) for each product represent?
A new catalyst injection system has a process mean of 8.01 grams and a standard deviation of 0.03 grams. The specifications are an upper limit of 8.12 grams and a lower limit of 7.88 grams. What is the Cpk performance of this system?
If a bakery adds a second production line with a design capacity of 201,600 rolls and an effective capacity of 175,000 rolls, what is the new total effective capacity for the bakery which already had one identical line?
Which of the following is NOT one of the limitations of the net present value (NPV) approach listed in the text?
A firm has annual fixed costs of $10,000. Labor is $3.50 per package and material is $4.50 per package. The selling price is $12.50 per package. What is the break-even point in units?
What is the key difference in how 'design capacity' and 'effective capacity' are defined?
In a process with a hygienist cleaning operation that takes 24 minutes per patient, what is the hourly system capacity in terms of patients?
What is the primary reason that organizations operate their facilities at a rate less than the design capacity?
When a firm offers products with complementary demand patterns, such as making jet ski engines in the summer and snowmobile motors in the winter, what capacity challenge is it addressing?
In a community dinner theater with multiple revenue streams (tickets, drinks, parking), the total fixed costs for a 10-performance run are $35,000. The weighted average contribution for all items is 0.558. What is the break-even point in dollars for the entire 10-performance run?
What is the final step (Step 5) of the five-step Theory of Constraints (TOC) process?
A manufacturing firm is considering two machines. Machine A has an annual cost of $6,000 and a salvage value of $2,000 after 3 years. Machine B has an annual cost of $5,000 and a salvage value of $7,000 after 3 years. Which machine has the lower total annual cost before considering salvage value?
What is the term for a body of knowledge that deals with anything that limits or constrains an organization’s ability to achieve its goals?
In a manufacturing process, a sawing operation takes 15 minutes, which is followed by a sanding operation that also takes 15 minutes. These two operations occur separately from a drilling operation that takes 27 minutes. After these operations, the parts go to a welding station that takes 25 minutes. Finally, one of three parallel assembly stations takes the part, with a total time for assembly being 78 minutes for all 3 operators combined. What is the bottleneck operation?
What is the efficiency of a system if its effective capacity is 300,000 rolls and its expected production (actual output) is 255,000 rolls?
If the probability of a favorable market for a new plant is 0.4, what is the probability of an unfavorable market?
Which principle of bottleneck management involves using concepts like 'drum, buffer, rope'?
An electronics firm currently has a variable cost of $0.50 per unit, a selling price of $1.00 per unit, and fixed costs of $14,000. Current volume is 30,000 units. What is the current profit?
A manufacturing company has a process with a throughput time of 133 minutes. Its bottleneck operation is drilling, which takes 27 minutes per unit. The firm operates 8 hours per day, 22 days per month. What is the monthly capacity of the process?
If a manager adds a second identical drilling machine in parallel to an existing one that takes 27 minutes, what happens to the bottleneck of the system if the next slowest operations (Assembly) take an effective time of 26 minutes?
A restaurant's daily break-even point is $245.50. Sandwiches account for 62.1 percent of the total dollar sales. If each sandwich sells for $5.00, how many sandwiches must be sold each day to break even?
What is the key to improving efficiency in a production system, according to the supplement?
In break-even analysis, what is the 'contribution'?