Normal Profits Refer to

question 57

Multiple Choice

Normal profits refer to

• A) fixed costs.
• B) variable costs.
• C) the accounting profit that would correspond to zero economic profit.
• D) positive economic profits.
• E) zero accounting profits.

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Definitions:

Direct Labor Cost

The total cost of all the labor directly involved in the production of goods or services.

Net Operating Income

The income earned from the primary activities of a business, not including expenses from interest and taxes.

Absorption Costing

An accounting method that includes all manufacturing costs (variable and fixed) in the cost of a product.

Unit Product Cost

Unit product cost is the total cost associated with producing one unit of a product, including all variable and fixed costs.