The Value of Intermediate Goods Is Not Included in the Calculation

question 154

Multiple Choice

The value of intermediate goods is not included in the calculation of GDP to avoid the problem of

• A)depreciation.
• B)inflation.
• C)double counting.
• D)transfer payments.

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Definitions:

Variable Manuf. Overhead

Costs that vary with the level of production output and are related to the manufacturing process but cannot be directly traced to individual units produced.

Direct Materials

Raw materials that are directly incorporated into a finished product and are easily traceable to it.

Labour Rate Variance

The difference between the actual labor costs incurred and the standard labor costs for the actual production level.

Actual Rate

The actual cost incurred or the price paid for materials, labor, or overhead as opposed to budgeted or standard costs.