Which of the Following Statements Is True

question 6

Multiple Choice

Which of the following statements is true?

• A) Many different production processes can be economically efficient, but only the method that involves the lowest possible cost is technically efficient.
• B) Many different production processes can be technically efficient, but only the method that involves the lowest possible cost is economically efficient.
• C) There is only one production process that is technically efficient, and this process is also economically efficient.
• D) There are many production processes that are both technically and economically efficient, but only one of these involves the lowest possible cost.

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Definitions:

Standard Cost System

An accounting system that uses standard costs for product costing, based on expected costs.

Fixed Manufacturing Overhead

Expenses in a manufacturing process that remain constant regardless of the level of production, including costs like factory lease payments and equipment maintenance.

Cash Account

An account recording all cash transactions, including receipts and payments, reflecting the liquidity of a business.

Standard Cost System

An accounting method that uses predetermined costs for product costing, budgeting, and inventory valuation purposes.