Question
Why is the capacity decision important? The capacity decision is important for several reasons 1) capacity costs represent a large portion of fixed costs 2) a facility of the wrong size means that costs are not as low as they could be 3) If a facility is too large, and portions of it remain idle, the firm's costs are too high because of the higher fixed costs 4) If a plant is too small, costs are again higher than they might be due to inefficiencies of working in cramped and crowded spaces 5) a facility too small may lead to lost sales perhaps even lost markets What is the correct answer is it A 1.2 and 4 B) 1.3 and 5 C 1.2,4 and 5 D 1,3,4 and 5 E) All of these 1,2,3,4 and 5 C
Answer
4.6
(260 Votes)
Preston
Professional · Tutor for 6 years
Answer
E) All of these
and 5
Explanation
## Step 1:The question asks us to identify the reasons why capacity decision is important. It provides a list of reasons and asks us to select the correct combination of reasons.## Step 2:By analyzing the provided reasons, we can see that all of them are valid reasons why capacity decision is important. ### The reasons are:1) Capacity costs represent a large portion of fixed costs.2) A facility of the wrong size means that costs are not as low as they could be.3) If a facility is too large, and portions of it remain idle, the firm's costs are too high because of the higher fixed costs.4) If a plant is too small, costs are again higher than they might be due to inefficiencies of working in cramped and crowded spaces.5) A facility too small may lead to lost sales, perhaps even lost markets.## Step 3:Since all the reasons provided are valid, the correct answer is the one that includes all these reasons.