A Company Started the Year with $400 of Supplies

question 22

Multiple Choice

A company started the year with $400 of supplies. During the year the company purchased additional supplies costing $1,600. There were $800 of supplies on hand at the end of the year. An adjusted trial balance prepared at the end of the accounting period will show the following balance in supplies:

• A)$0.
• B)$800.
• C)$600.
• D)$1,400.

Identify and explain the presence of diminishing returns and its impact on cost curves.

Understand the concept of economies and diseconomies of scale in production costs.

Analyze and interpret cost curves, including total cost, marginal cost, and average cost curves.

Calculate annual costs based on operational periods and output levels.

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Definitions:

Machine Hours

A measure of the amount of time a machine is operated within a given period.

Indirect Labor

Indirect labor costs refer to wages paid to employees who are not directly involved in production work, such as supervisors, maintenance workers, and other support staff.

ABC Implementation

The process of introducing Activity-Based Costing into an organization to allocate costs more accurately to products, services, and customers.

Activity Overhead Rates

Rates used to allocate overhead costs to products or services based on specific activities driving the overhead expenses.