To Apply the Units-Of-Activity Method, All of the Following Information

question 24

Multiple Choice

To apply the units-of-activity method, all of the following information is needed EXCEPT the

• A) original cost.
• B) estimated residual value.
• C) estimated useful life.
• D) estimated usage.

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Definitions:

Variable Inputs

Resources used in production that can vary in quantity in the short run, such as labor and raw materials.

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain constant.

Fixed Inputs

Resources used in production that cannot be easily increased or decreased in the short term, such as buildings or machinery.

Variable Inputs

Resources or factors of production whose quantity can be changed in the short term to influence output.