Costs That Are NOT Classified as Direct Materials or Direct

question 18

Multiple Choice

Costs that are NOT classified as direct materials or direct labor but are essential to the production of goods and services are:

• A) Differential costs
• B) Manufacturing overhead costs
• C) Fixed costs
• D) Sunk costs

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Definitions:

Output Effect

The impact on total production and economic output resulting from changes in price levels, influencing the quantity supplied or demanded.

Marginal Physical Product

The additional output that can be produced by adding one more unit of a specific input, while holding other inputs constant.

Additional Output

The extra amount of production generated as a result of increasing inputs or improving efficiency.

Productivity

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