Question at position 9 In the context of Total Cost of Manufacturing (TCM), in general terms, procurement, manufacturing, inventory, warehousing, and transportation per unit costs each go up as volume goes up.TrueFalse

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Question at position 9 In the context of Total Cost of Manufacturing (TCM), in general terms, procurement, manufacturing, inventory, warehousing, and transportation per unit costs each go up as volume goes up.TrueFalse

BlackTom AI · Accepted Answer

The question asks about Total Cost of Manufacturing (TCM) and how per unit costs for procurement, manufacturing, inventory, warehousing, and transportation behave as volume increases. 
Option 1: True. Proponents of this view might suggest that increasing volume always drives costs up per unit across these categories. However, in practice, many per‑unit costs fall as volume rises because fixed costs are spread over a larger output, and bulk purchasing can reduce unit prices. Additionally, economies of scale in production often lower unit manufacturing costs, and better inventory turnover and transportation efficiency at higher volumes can reduce per‑unit costs. Therefore, this option reflects a simplistic view and is not generally correct.
Option 2: False. This statement aligns with the standard understanding of cost behavior in TCM: as volume increases, fixed costs are allocated over more units, and variable costs can sometimes be reduced through efficiencies, bulk procurement, and improved logistics. While there can be exceptions (capacity constraints, step costs, or congestion at very high volumes), the general trend is downward in per‑unit cost with increasing volume. This makes the statement more accurate overall, given typical cost structures in procurement, manufacturing, inventory, warehousing, and transportation.
In summary, the “True” option posits a per‑unit cost increase with volume that contradicts the common economic principle of economies of scale, whereas the “False” option reflects the more prevalent behavior where higher volumes tend to reduce per‑unit costs due to spreading fixed costs and leveraging volume efficiencies.

Question at position 9 In the context of Total Cost of Manufacturing (TCM), in general terms, procurement, manufacturing, inventory, warehousing, and transportation per unit costs each go up as volume goes up.TrueFalse

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