Cyber Monday 2023! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: CM25OFF
Welcome to Pass4Success

- Free Preparation Discussions

IMANET Exam CMA Topic 6 Question 3 Discussion

Actual exam question for IMANET's Certified Management Accountant exam
Question #: 3
Topic #: 6
[All Certified Management Accountant Questions]

What is the key strategic issues when a firm is considering capacity expansion?

Show Suggested Answer Hide Answer
Suggested Answer: D

Whether to expand capacity is a major strategic decision because of the capital required, the difficulty of forming accurate expectations, and the long time frame of the lead times and the commitment. The key forecasting problems are long-term demand and behavior of competitors. The key strategic issue is avoidance of industry overcapacity. Undercapacity in a portable industry trends to be a short-term issue. Profits ordinarily lure additional investors. Overcapacity trends to be a long-term problem because firms are more likely to compete intensely rather than reverse their expansion


Currently there are no comments in this discussion, be the first to comment!

Save Cancel