Some Companies Use Throughput Costing for Internal Purposes Because

question 29

Multiple Choice

Some companies use throughput costing for internal purposes because

• A) They believe only direct materials costs are truly variable in the short run
• B) They believe direct labor costs are fixed in the short run
• C) They believe all overhead costs are fixed in the short run
• D) All of the above

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Definitions:

Socially Efficient Quantity

The level of production of a good or service that results in the optimal combination of economic efficiency and social welfare.

Market Equilibrium

A market state where the supply of goods matches demand, resulting in stable prices where the quantity of goods buyers are willing to buy equals the quantity sellers are willing to sell.

Output

The overall production of merchandise or services by a corporation, field, or the economic environment.

Quantity

The amount or number of a material or immaterial entity that is considered separately.