The Long-Run Average Total Cost Curve Shows the Relationship Between

question 118

True/False

The long-run average total cost curve shows the relationship between output and the average total cost when fixed cost has been chosen to minimize average total cost for each level of output.

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Definitions:

Plantwide Overhead Rate

A single, uniform overhead rate applied throughout a manufacturing plant, calculated by dividing total factory overhead by a chosen allocation base.

Overhead Allocation Base

A measure used to distribute overhead costs among products or services, often based on direct labor hours, machine hours, or direct labor costs.

Manufacturing Overhead

All the indirect costs associated with manufacturing a product, such as utilities, maintenance, and factory equipment depreciation, not directly traceable to a specific product.

Activity Cost Drivers

Refers to factors that influence or contribute to the expenses associated with different business activities.