A Highly Innovative Firm Operating in a Competitive Market Will

question 25

Multiple Choice

A highly innovative firm operating in a competitive market will usually have

• A) a permanent edge over its competitors.
• B) a lack of ability to earn reasonable profits.
• C) vast numbers of competitors catching up to its innovations.
• D) some time before competitors catch up to its innovations.

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Definitions:

Predetermined Overhead Rate

is calculated before a period begins and is used to allocate manufacturing overhead costs to products based on a chosen activity basis, such as labor hours or machine hours.

Variable Manufacturing Overhead

Indirect production costs that vary with the level of output, such as utilities or indirect labor.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, often used as a basis for allocating manufacturing overhead to products.

Fixed Manufacturing Overhead

Costs associated with the production process that do not vary with the level of output, including costs like rent, salaries of permanent staff, and machinery depreciation.