You are asked to assist in a cost estimate for the production of new shipping containers. Based on the details of the contract, you know that the containers will all be based on a consistent production design, that the production process emphasizes productivity improvement, and that the production team has had a very low turnover rate over the last two periods of performance. In an uninterrupted serial production cycle, what can you assume will happen to the unit cost as production quantities increase? A. The unit cost will decrease B. The unit cost will increase C. The unit cost will increase and decrease cyclically D. The unit price will stay the same
You are asked to assist in a cost estimate for the production of new shipping containers. Based on the details of the contract, you know that the containers will all be based on a consistent production design, that the production process emphasizes productivity improvement, and that the production team has had a very low turnover rate over the last two periods of performance. In an uninterrupted serial production cycle, what can you assume will happen to the unit cost as production quantities increase? A. The unit cost will decrease B. The unit cost will increase C. The unit cost will increase and decrease cyclically D. The unit price will stay the same
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You are asked to assist in a cost estimate for the production of new shipping containers. Based on the details of the contract, you know that the containers will all be based on a consistent production design, that the production process emphasizes productivity improvement, and that the production team has had a very low turnover rate over the last two periods of performance. In an uninterrupted serial production cycle, what can you assume will happen to the unit cost as production quantities increase?
A. The unit cost will decrease
B. The unit cost will increase
C. The unit cost will increase and decrease cyclically
D. The unit price will stay the same
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