If the Cost of Materials Is Not a Significant Portion

question 75

True/False

If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of factory overhead cost.

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Definitions:

Diseconomies Of Scope

A situation in which a company experiences increased costs as a result of increasing the variety of goods or services it produces.

Economies Of Scope

Cost advantages that enterprises obtain due to the efficient production of a wider variety of goods or services together rather than separately.

Long-Run Marginal Cost

The cost of producing one more unit of a product when all production factors are variable.

Pricing

The process of determining the value that will be charged for goods or services.