Exam 12: Technology and Operations Management

The point where the revenue, from the sales of the products (units) offered to the marketplace, equals the total costs (variable costs + fixed costs) associated with producing these products (units) is contribution margin.

is fundamental to determining the feasibility of various ______ objective levels.

Virtual Electronics utilizes a strategy to charge a very high introductory price for their automobile video theater.After identifying that their rival firms did not carry this new product,they chose this strategy to achieve maximum profits.Virtual Electronics has chosen a bundling strategy.

Determining how the organization is to compete is a reason for managers to understand the configuration of the cost base of the organization.

The level of sales revenue or volume which is required in order for the organization to cover all of its costs is called the contribution margin.

Phil asks you to calculate the break-even point for his firm.You respond that you will need forecasted sales volume,operating expenses,and asset values.

The percentage impact which key cost areas have on the total cost base of the organization is a key element of understand the configuration of the cost base.

The more the cost base is composed of fixed or indirect costs,the more ______ it is for managers to use cost reduction strategies to protect the organization's profitability in response to decreases in demand for products and services.

Ongoing operating levels below BEP will eventually result in the organization becoming insolvent.

is fundamental to determining the feasibility of various income objective levels.

Fixed costs are those costs that increase as the level of production increases.

to establish production facilities in low cost countries.

The formula for the Break-even Point plus profit is variable cost per unit of output.

_______ are those costs which are directly tied to the manufacturing of a product,or the delivery of a service,depending on the type of business being assessed.

The relationship between variable and fixed costs impacts the degree of skill which a management team has over its cost base.

Costs incurred regardless of the number of units of a product that are produced or sold are called controllable costs.

is called the:

Costs incurred regardless of the number of units of a product that are produced or sold are called fixed costs.

What are the two fundamental conclusions which managers hope to identify with respect to the organization's cost base?

to calculate the break-even point and determine the potential profit at different levels of sales.