The Failure to Produce Enough to Minimize Average Total Cost

question 221

Multiple Choice

The failure to produce enough to minimize average total cost is termed:

• A)economic profits.
• B)excess capacity.
• C)advertising.
• D)excess production.

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Definitions:

Static Budget

A fixed budget that does not change or adapt to variations in business activity levels throughout the fiscal year.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, enabling more accurate budgeting in variable cost categories.

Single Level

Referring to a structure or system that operates or is organized at one layer or stage without any subdivisions or hierarchical levels.

Activity Levels

Activity Levels in cost accounting refer to the volume of production or operations that can significantly influence costs, guiding how businesses adjust their spending and operational strategies.