Question

Which of the following statements about process efficiency is FALSE? Multiple Choice Cost of direct labor goes up if flow rate goes up. A process is efficient if it is able to achieve a high flow rate with few resources. Cycle time goes up if flow rate goes down. Revenue goes up if flow rate goes up.

Answer 1

Cost of direct labor goes up if flow rate goes up

Step-by-step explanation:

As we know that

Cost of direct labor = Wages per unit of time ÷ Flow Rate

This cost of direct labor implies that whenever the flow rate rises, the cost of direct labor will decline that depicts the negative relationship between them and if the flow rate declines, the cost of direct labor increases

Moreover, by dividing the wages per unit of time from the flow rate we can get the cost of direct labor

Therefore, the first option is correct that shows the given statement is false regarding the process efficiency