When Economies of Scale Are Present

question 153

Multiple Choice

When economies of scale are present,

• A)costs per unit decline as output expands.
• B)the government feels responsible for breaking up the firm.
• C)firms always make handsome profits.
• D)costs fall as the size of the product is increased.

Calculate predetermined overhead rates and understand how these rates are used in allocating manufacturing overhead to products or jobs.

Determine the actual manufacturing overhead and compare it with applied overhead to find underapplied or overapplied overhead.

Learn how to close out any underapplied or overapplied manufacturing overhead to Cost of Goods Sold (COGS) or other accounts as appropriate.

Understand the role of T-accounts in tracking and summarizing transactions related to manufacturing costs including direct materials, direct labor, and manufacturing overhead.

---

Definitions:

High-Performance Work System

An organizational approach that integrates people, technology, and processes to maximize productivity and competitiveness.

Productivity

A measure of efficiency, often quantified as the ratio of outputs to inputs in the production process.

Efficiency

The ratio of the useful output produced by a system to the input provided, measuring the system's ability to optimize resources.

Employees' Rewards

The various forms of compensation, benefits, and recognition provided to employees for their contributions to the organization.