Question

Which of the following statements about process efficiency is FALSE?

• A process is efficient if it is able to achieve a high flow rate with few resources.
• Cost of direct labor goes up if flow rate goes up 
• Revenue goes up if flow rate goes up
• Cycle time goes up if flow rate goes down.

Answer 1

The correct option is Cost of direct labor goes up if flow rate goes up

Reasoning :-

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

So when flow rate increases, the cost of direct labor will decrease and vice versa.

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