FINANCIAL MANAGEMENT.

Running Head: FINANCIAL MANAGEMENT
FINANCIAL MANAGEMENT
Name of the Student
Name of the University
Author Note

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Table of Contents
Cost Behavior.............................................................................................................................2
Reference....................................................................................................................................3

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Cost Behavior
Production capacity in the manufacturing environment is defined as the maximum
possible output in the economy. It is defined as the ability for deploying the capacity if the
product which is based on the demands for the goods by using the current resources that
includes factors such as labor, land, infrastructure, facilities and machines. The capacity of
production is referred by using three definitions of the capacity. First is, design capacity,
which means that the maximum possible output that can be achieved, second is, the effective
capacity that means the maximum possible output under the given constraint such as product
mix consumption, requirement of quality, scheduling problems and machine maintenance.
Last is, actual output, which is defined as the rate of the output, which is actually attained that
is typically less than effective output that caused by the breakdown of machine. Insufficient
capacity will lead towards poor performance, frustration of the manufacturing personnel and
increase work in progress that affects reduction in the productivity prospects and customer
dissatisfaction (Hitomi, 2017).
The constraint of the productive capacity is the factor, which prevents the
manufacturing company for achieving the more output that includes minor bottlenecks,
capital that is constrained, resources and design. Hence, decisions are required for finding out
the objectives that maximize profits that is subject to constraints. The production capacity
operates within the relevant range. However, there is no equipment and machinery, which can
operate above relevant ranges for very long. In the analysis of the cost behavior
representation of the relevant range is expressed in terms of production bracket in terms of
the unit in which the fixed costs are fixed indeed (Bromiley et al. 2015).

3FINANCIAL MANAGEMENT
Reference
Bromiley, P., McShane, M., Nair, A., & Rustambekov, E. (2015). Enterprise risk
management: Review, critique, and research directions. Long range planning, 48(4),
265-276.
Hitomi, K. (2017). Manufacturing systems engineering: A unified approach to manufacturing
technology, production management and industrial economics. Routledge.