The Great Economic Problem Is To

question 84

Multiple Choice

The great economic problem is to:

• A) increase resources to satisfy as many of our limited wants as possible.
• B) equally allocate resources to satisfy as many of our limited wants as possible.
• C) create unlimited resources to satisfy as many of our infinite wants as possible.
• D) arrange our limited resources to satisfy as many of our infinite wants as possible.

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Definitions:

Contribution Format

An income statement format that separates fixed costs from variable costs to highlight the contribution margin of a company.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overheads) in the price of a product.

Variable Costing

An accounting method that includes all variable production costs (materials, labor, overhead) in product costs but treats fixed overhead expenses as period costs.

Reconciliation

The process of ensuring two sets of records (usually the balances of two accounts) are in agreement.