If Average Costs of Production Decline with Increases in Output

question 22

Multiple Choice

If average costs of production decline with increases in output for a particular firm:

• A)many small firms will be more efficient than a single large firm.
• B)one large producer will be more efficient than many small producers.
• C)product diversification is necessary to spread the overhead.
• D)diseconomies of scale become significant as output increases.
• E)the variable cost of production must exceed the fixed costs.

Understand and apply the concept of budgeting in merchandising and manufacturing firms.

Calculate budgeted sales, cash collections, and cash disbursements.

Prepare comprehensive master budgets, including sales, production, and cash budgets.

Analyze budgeted income statements and balance sheets for planning purposes.