Consider the Investment Component (I)of GDP

question 26

Multiple Choice

Consider the investment component (I) of GDP.To calculate the change in the value of inventories for the investment component of GDP,one should use their

• A)cost of production at the time they were produced.
• B)cost of production minus the costs of labour and capital.
• C)current market value.
• D)market value at the time they were produced.
• E)market value at the time they were added to inventory.

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Definitions:

Manufacturing Overhead

includes all manufacturing costs that are not directly related to the production of goods, such as factory rent, utilities, and maintenance expenses.

Unit Product Cost

The cumulative expense of manufacturing a single product unit, encompassing direct materials, direct labor, and overhead costs related to production.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or services, calculated before the actual costs are known, based on estimated costs.

Overhead Rate

A measure used to allocate overhead costs to products or services, often calculated by dividing total overheads by a base measure such as labor hours or machine hours.