The Law of Diminishing Returns Applies When

question 99

Multiple Choice

The law of diminishing returns applies when:

• A) one or more factors of production are held fixed while inputs of one factor are increased
• B) all factors of production can be varied
• C) all factors of production are fixed
• D) none of the above

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Definitions:

Standard Quantity

A benchmark or norm for the amount of materials or labor expected to be used during the production of a good or service.

Direct Materials

Direct materials are the raw materials that are directly traceable and integral to the finished product in the manufacturing process.

Variable Manuf. Overhead

Costs of manufacturing overhead that vary with the level of production activity.

Labour Rate Variance

The difference between the actual cost of labor and the budgeted or standard cost of labor.