The Concept of Value Added Refers to

question 169

Multiple Choice

The concept of value added refers to

• A)the amount paid in the final sale of a product or service.
• B)the amount subtracted from the value of resources because of depreciation.
• C)the amount subtracted from the value of goods because of inflation.
• D)the increase in the value of a product that occurs at each stage of production.
• E)the total value of all intermediate goods used in the production of the final good.

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Definitions:

Cost Driver

A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent or salaries.

Flexible Budget

A budget that adjusts or varies with changes in volume or activity levels.

Level Of Activity

Refers to the volume of production or operations within a business, which can impact costs and efficiency.