Which of the following combinations would result in the lowest production cost per unit?
(A) Limited customer contact, limited product variety and low volume
(B) Limited customer contact, limited product variety and high volume
(C) Extensive customer contact, extensive product variety and low volume
(D) Extensive customer contact, extensive product variety and high volume - HSC - SSCE Business Studies - Question 17 - 2013 - Paper 1
Question 17
Which of the following combinations would result in the lowest production cost per unit?
(A) Limited customer contact, limited product variety and low volume
(B)... show full transcript
Worked Solution & Example Answer:Which of the following combinations would result in the lowest production cost per unit?
(A) Limited customer contact, limited product variety and low volume
(B) Limited customer contact, limited product variety and high volume
(C) Extensive customer contact, extensive product variety and low volume
(D) Extensive customer contact, extensive product variety and high volume - HSC - SSCE Business Studies - Question 17 - 2013 - Paper 1
Step 1
Limited customer contact, limited product variety and low volume
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Answer
This option is likely to lead to higher costs per unit as low volume typically means less efficiency in production.
Step 2
Limited customer contact, limited product variety and high volume
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Answer
This option represents a balance where high production volume can leverage economies of scale, thus minimizing costs per unit.
Step 3
Extensive customer contact, extensive product variety and low volume
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Answer
Extensive customer contact and variety generally increase complexity and cost, especially at low volumes.
Step 4
Extensive customer contact, extensive product variety and high volume
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Answer
While high volume may reduce costs, the extensive variety and customer contact could offset savings due to increased complexity.
