Operations management

Question 1

Explain the type of cost

Answer 1

1. Fixed cost:do not vary with output produced or sold
   Also known as overhead cost

Question 2

Explain the type of cost

Answer 2

2. Variable cost:cost are directly vary with the output produced or sold

Question 3

Explain the formula

Answer 3

Total cost=Total fixed cost + Total variable cost

Question 4

Explain the formula

Answer 4

Total cost=Average cost × output

Question 5

Explain the formula

Answer 5

Average cost(unit cost)=Total cost/Total output

Question 6

Explain the scale of production

Answer 6

(i)Economies of scale
(ii)Purchasing
(iii)Marketing

Question 7

Explain break-even

Answer 7

It is the output as which total revenue equal total cost

Question 8

Explain the formula

Answer 8

Margin of safety(units)=units being produced and sold - break-even output

Question 9

Explain the advantage of break-even

Answer 9

(i)Managers can change the cost
(ii)Managers can look to find out the profit or loss

Question 10

Explain the formula

Answer 10

Break-even level of production=Total fixed cost/contribution per unit

Question 11

Explain the formula

Answer 11

Contribution=selling price-variable cost per unit