Refer to the Diagram

question 14

Multiple Choice

Refer to the diagram. If actual production and consumption occur at Q₃,

• A)efficiency is achieved.
• B)an efficiency loss (or deadweight loss)of e + f occurs.
• C)an efficiency loss (or deadweight loss)of a + b + c + d occurs.
• D)an efficiency loss (or deadweight loss)of a + c occurs.

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Definitions:

Unit-level Activity

Activities that are performed each time a unit is produced, directly associated with the production of units.

Manufacturing Overhead Costs

Expenses related to the production process that are not directly tied to the product, such as rent, utilities, and salaries of managers.

Activity-based Costing

A costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

Production Order

A document issued to the manufacturing shop floor to produce a specific quantity of material within a certain timeframe.