Question

In: Operations Management

Costs that do not change with production level are known as fixed costs Question 1 options:...

Costs that do not change with production level are known as fixed costs

Question 1 options:

True
False

Question 2 (1 point)

Payback analysis utilizes a significantly different approach to alternative evaluation than the primary methods of PW, AW, ROR, and B/C. It is possible for payback analysis to select a different alternative than these techniques.  

Question 2 options:

True
False

Question 3 (1 point)

Examples of fixed costs are direct labor, materials, and warranty.

Question 3 options:

True
False

Question 4 (1 point)

Total Cost= Fixed Costs + Variable Costs

Question 4 options:

True
False

Solutions

Expert Solution

Costs that do not change with production level are known as fixed costs

Answer: True

Explanation: There are two type of costs: fixed and variable. Fixed costs remain same irrespective of level of proudction. Examples are rent of the land etc. Variabel costs increase or decrease with increase or decrease in the production.

Payback analysis utilizes a significantly different approach to alternative evaluation than the primary methods of PW, AW, ROR, and B/C. It is possible for payback analysis to select a different alternative than these techniques.

Answer: True

Explanation: Payback period is the time required to recover the investment. It is possible that a firm may choose alternative than these techniques if does not suit the reqirements of the firm.

Examples of fixed costs are direct labor, materials, and warranty.

Answer: False

Explanation: Fixed costs do not change with the level of production. Labor, material and warranty changes with production levels; therefore they are variable costs and not fixed costs.

Total Cost= Fixed Costs + Variable Costs

Answer: True

Explanation: Total costs are sum of fixed costs and variable costs.

keosha answered 5 months ago
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