The Principle Stating That, for Virtually All Goods and Services

question 162

Multiple Choice

The principle stating that, for virtually all goods and services, there is a negative relationship between price and quantity demanded, all other things unchanged, is the law of:

• A) supply.
• B) demand.
• C) scarcity.
• D) increasing opportunity costs.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or services, calculated before the actual costs are known, based on estimated costs.

Overhead Rate

A measure used to allocate overhead costs to products or services, often calculated by dividing total overheads by a base measure such as labor hours or machine hours.

Estimated Labor-Hours

The projected number of labor hours required to complete a batch of goods or provide a service.

Predetermined Overhead Rate

A rate used to allocate estimated overhead costs to products or job orders, based on a planned level of activity or driver.