Exhibit 13-2 One Reason for the Decline in Output

question 185

Multiple Choice

Exhibit 13-2 One reason for the decline in output with the seventh machine in Exhibit 13-2 could be that

• A)the increase in the company's power consumption when seven machines are being used causes its electricity bills to be much higher
• B)the increase in the company's power consumption when seven machines are being used causes fuses to blow more often
• C)no one uses the seventh machine; only six are necessary
• D)no one uses the seventh machine; only five are necessary
• E)workers no longer have to wait in line to make copies because more machines are available

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Definitions:

Direct Expense

Expenses that can be directly traced to a specific cost object, such as a product or a department, including materials and labor directly involved in production.

Indirect Expense

Costs that are not directly tied to the production of goods or services, such as utilities, rent, and administrative salaries.

Direct Expense

Costs that can be directly attributed to the production of specific goods or services, such as raw materials and labor.

Electricity

Form of energy resulting from the existence of charged particles, used for power and lighting.