Which of the Following Statements Is True

question 97

Multiple Choice

Which of the following statements is true?

• A) In the long run, a firm cannot vary any of its inputs.
• B) In the long run, a firm can vary all its inputs.
• C) In the short run, a firm cannot vary any of its inputs.
• D) In the short run, a firm can vary all its inputs.

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products, based on a planned level of activity.

Direct Labor-hours

The sum of hours logged by workers directly engaged in creating products.

Manufacturing Overhead

Manufacturing overhead encompasses all costs of manufacturing beyond direct materials and direct labor, including expenses like factory equipment depreciation and quality control.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to production activities based on a certain base, such as direct labor hours or machine hours.