Question 1

The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000.He figures it will cost an additional $150 per cord to purchase and split wood with this machine,while he can sell each cord of split wood for $200. How many cords of wood would he have to split with this machine to make a profit of $50,000?

Accepted Answer

A)  3000
B)  2000
C)  1500
D)  1000
E)  500F) B) and D)
G) C) and D)

Question 2

The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.

Accepted Answer

A) True 
 B)False

Question 3

Design capacity refers to the maximum output rate under ideal conditions.

Accepted Answer

A) True 
 B)False

Question 4

In break-even analysis,costs that vary directly with volume of output are referred to as fixed costs because they are fixed to the level of output.

Accepted Answer

A) True 
 B)False

Question 5

An alternative will have fixed costs of $10,000 per month,variable costs of $50 per unit,and revenue of $70 per unit.The break-even point volume is:

Accepted Answer

A)  143
B)  200
C)  350
D)  500
E)  600F) A) and E)
G) C) and D)

Question 6

What is the break-even quantity for the following situation? FC = $1,200 per week
VC = $2 per unit
Revenue (R) = $6 per unit

Accepted Answer

A)  100
B)  200
C)  300
D)  600
E)  1200F) C) and E)
G) C) and D) C

Question 7

Which of the following is not a determinant of effective capacity?

Accepted Answer

A)  Facilities
B)  Product mix
C)  Actual output
D)  The workforce
E)  External factorsF) A) and D)
G) C) and D)

Question 8

Given the following information,the efficiency is: Effective capacity = 50 units per day
Design capacity = 100 units per day
Actual output = 30 units per day

Accepted Answer

A)  40%
B)  50%
C)  60%
D)  80%
E)  90%F) B) and E)
G) B) and D) C

Question 9

Evaluation of capacity alternatives involves economic calculations only.

Accepted Answer

A) True 
 B)False  False

Question 10

Doctor J.is considering purchasing a new blood analysis machine for $60,000.He estimates that he could charge $80.00 for an office visit to have a patient's blood analyzed,while the variable cost of a blood analysis would be $30.00. If this new blood analysis machine has design and effective capacities of 6,000 and 5,000 blood analyses per year,respectively,and Dr.J.expects to perform 4,500 blood analyses each year,what will be the utilization of this machine?

Accepted Answer

A)  0%
B)  75%
C)  83%
D)  90%
E)  100%F) A) and B)
G) A) and C)

Question 11

The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000.He figures it will cost an additional $150 per cord to purchase and split wood with this machine,while he can sell each cord of split wood for $200. If,for this machine,design capacity is 50 cords per day,effective capacity is 40 cords per day,and actual output is expected to be 32 cords per day,what would be its efficiency?

Accepted Answer

A)  100%
B)  80%
C)  75%
D)  70%
E)  0%F) A) and D)
G) B) and E)

Question 12

The owner of a greenhouse and nursery is considering whether to spend $12,000 to acquire the licensing rights to grow a new variety of rose bush,which she could then sell for $8 each.Variable costs would be $5 per rosebush. How many rose bushes would she have to produce and sell in order to make a profit of $6,000?

Accepted Answer

A)  6,000
B)  4,000
C)  3,000
D)  2,400
E)  1,500F) A) and D)
G) A) and C)

Question 13

As utilization increases the number of jobs/people waiting in an operating system decreases.

Accepted Answer

A) True 
 B)False

Question 14

Considerations in forecasting long-term demand do not include:

Accepted Answer

A)  identifying demand trends
B)  duration of demand trends
C)  amplitude of demand cycles
D)  the slope of the trend
E)  exclusion from marketing input into the forecastF) A) and C)
G) All of the above

Question 15

Which is not true about long-term capacity?

Accepted Answer

A)  Excess capacity can serve as a barrier to entry for other companies.
B)  Capacity may be difficult and costly to modify.
C)  Exceeding capacity minimizes operating costs.
D)  Capacity affects the ability to satisfy customer's demand.
E)  Capacity is usually a major determinant of initial capital costs.F) A) and D)
G) C) and D)

Question 16

The utilization of an operation is .90 and it is .87 efficient.If the quality ratio is .98 what is the overall equipment effectiveness?

Accepted Answer

A)  0.567
B)  0.667
C)  0.767
D)  0.870
E)  0.98F) A) and E)
G) D) and E)

Question 17

The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000.He figures it will cost an additional $150 per cord to purchase and split wood with this machine,while he can sell each cord of split wood for $200. If,for this machine,design capacity is 50 cords per day,effective capacity is 40 cords per day,and actual output is anticipated to be 35 cords per day,what would its utilization be?

Accepted Answer

A)  100%
B)  80%
C)  75%
D)  70%
E)  0%F) A) and E)
G) A) and B)

Question 18

Doctor J.is considering purchasing a new blood analysis machine for $60,000.He estimates that he could charge $80.00 for an office visit to have a patient's blood analyzed,while the variable cost of a blood analysis would be $30.00. How many blood analyses would he have to perform in order to make a profit of $50,000?

Accepted Answer

A)  2,200
B)  2,000
C)  1,200
D)  625
E)  500F) A) and B)
G) B) and D)

Question 19

Seasonal variations are typically easier to deal with in capacity planning than random variations because seasonal variations tend to be:

Accepted Answer

A)  smaller.
B)  larger.
C)  predictable.
D)  controllable.
E)  less frequent.F) A) and B)
G) None of the above

Question 20

What is the term used to define the length of time it will take for an investment to return its original cost.

Accepted Answer

A)  Break even time
B)  Investment horizon
C)  Payback
D)  Break even term
E)  Break-even point in dollarsF) B) and C)
G) A) and D)

Exam 6: Strategic Capacity Planning

Correct Answer
verified

The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.

Correct Answer
verified

Design capacity refers to the maximum output rate under ideal conditions.

Correct Answer
verified

In break-even analysis,costs that vary directly with volume of output are referred to as fixed costs because they are fixed to the level of output.

Correct Answer
verified

An alternative will have fixed costs of $10,000 per month,variable costs of $50 per unit,and revenue of $70 per unit.The break-even point volume is:

Correct Answer
verified

What is the break-even quantity for the following situation? FC = $1,200 per week VC = $2 per unit Revenue (R) = $6 per unit

Correct Answer
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C

Which of the following is not a determinant of effective capacity?

Correct Answer
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Given the following information,the efficiency is: Effective capacity = 50 units per day Design capacity = 100 units per day Actual output = 30 units per day

Correct Answer
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C

Evaluation of capacity alternatives involves economic calculations only.

Correct Answer
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False

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Correct Answer
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Correct Answer
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As utilization increases the number of jobs/people waiting in an operating system decreases.

Correct Answer
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Considerations in forecasting long-term demand do not include:

Correct Answer
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Which is not true about long-term capacity?

Correct Answer
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The utilization of an operation is .90 and it is .87 efficient.If the quality ratio is .98 what is the overall equipment effectiveness?

Correct Answer
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Correct Answer
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Correct Answer
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Seasonal variations are typically easier to deal with in capacity planning than random variations because seasonal variations tend to be:

Correct Answer
verified

What is the term used to define the length of time it will take for an investment to return its original cost.

Correct Answer
verified

Exam 6: Strategic Capacity Planning

Correct AnswerverifiedShow Answer

The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.

Correct AnswerverifiedShow Answer

Design capacity refers to the maximum output rate under ideal conditions.

Correct AnswerverifiedShow Answer

In break-even analysis,costs that vary directly with volume of output are referred to as fixed costs because they are fixed to the level of output.

Correct AnswerverifiedShow Answer

An alternative will have fixed costs of $10,000 per month,variable costs of $50 per unit,and revenue of $70 per unit.The break-even point volume is:

Correct AnswerverifiedShow Answer

What is the break-even quantity for the following situation? FC = $1,200 per week VC = $2 per unit Revenue (R) = $6 per unit

Correct AnswerverifiedC

Which of the following is not a determinant of effective capacity?

Correct AnswerverifiedShow Answer

Given the following information,the efficiency is: Effective capacity = 50 units per day Design capacity = 100 units per day Actual output = 30 units per day

Correct AnswerverifiedC

Evaluation of capacity alternatives involves economic calculations only.

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As utilization increases the number of jobs/people waiting in an operating system decreases.

Correct AnswerverifiedShow Answer

Considerations in forecasting long-term demand do not include:

Correct AnswerverifiedShow Answer

Which is not true about long-term capacity?

Correct AnswerverifiedShow Answer

The utilization of an operation is .90 and it is .87 efficient.If the quality ratio is .98 what is the overall equipment effectiveness?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Seasonal variations are typically easier to deal with in capacity planning than random variations because seasonal variations tend to be:

Correct AnswerverifiedShow Answer

What is the term used to define the length of time it will take for an investment to return its original cost.

Correct AnswerverifiedShow Answer

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C

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C

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False

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