The Following Question Are Based on the Following Information

question 1

Multiple Choice

The following question are based on the following information:

-If intended spending falls short of the total value of final goods and services produced

• A) GDP will rise.
• B) firms will cut back on their production rates.
• C) inventories will be depleted faster than firms desire.
• D) the aggregate supply curve must be vertical.
• E) depreciation exceeds investment.

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Definitions:

Predetermined Overhead Rate

A predetermined overhead rate is used to allocate indirect costs to products or services based on a predetermined formula.

Manufacturing Overhead

All indirect costs related to the manufacturing process, such as salaries of supervisors, rent of the factory, and utilities, which cannot be directly traced to specific units produced.

Work in Process

Inventory that includes goods that are in the process of being produced but are not yet completed.

Cost of Goods Sold

Costs directly incurred in the creation of a company's sold products.