Santa Lucia Industries employs 500 workers in the factory. These workers produced 85,000 units in 2016. Due to a special order, the units produced in 2017 increased to 95,000 units. However, Santa Lucia produced these units without adding workers. How is that possible?
A) The labor cost associated with the additional units sold will be a relevant cost.
B) The employees were a flexible resource in this situation.
C) The plant had some unused activity capacity.
D) none of the above

Question

Quizplus · Accepted Answer

The fact that Santa Lucia was able to produce 95,000 units without adding any workers suggests that they had some unused activity capacity in their plant. This means that they had the ability to produce more without incurring additional costs. This is likely due to better utilization of resources, improved production processes, or increased efficiency.

Santa Lucia Industries Employs 500 Workers in the Factory