Periods in Which Output and Employment Are Falling in Many

question 11

Multiple Choice

Periods in which output and employment are falling in many industries are called:

• A) recessions.
• B) booms.
• C) expansions.
• D) deflations.

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Definitions:

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Variable Costing

An accounting method in which variable manufacturing costs are included in product costs, while fixed manufacturing overhead is treated as an expense of the current period.

Net Operating Income

A financial metric that calculates a company's income after operating expenses are deducted, but before interest and taxes are subtracted.

Direct Material Cost

The expense of fundamental materials directly utilized in the production of a product.