Economies of Scope Exist When

question 346

Multiple Choice

Economies of scope exist when

• A) the total cost of production falls as the output increases.
• B) a firm hires specialized resources to produce a range of goods and services.
• C) a firm uses outsourcing to produce a good or service.
• D) the cost of producing a unit of a good falls as its output increases.

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Definitions:

Job Order Costing

An accounting methodology used to track the expenses of creating a specific product or providing specific services and assign those costs to the products or services.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the costs to convert raw materials into finished products.

Direct Labor

The labor costs that are directly traceable to the production of specific goods or services, representing the cost of workers who physically convert materials into finished products.

Factory Overhead

All indirect manufacturing costs, including utilities, maintenance, and depreciation of factory equipment.