Which of the Following Is a Common Method Used by Government

question 243

Multiple Choice

Which of the following is a common method used by government to cope with the situation in which production of a good creates an external cost?

• A) removing property rights
• B) subsidizing production
• C) marketable permits
• D) lottery
• E) vouchers

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Definitions:

Machine-Hours

A measure of the amount of time a machine is operated, used as a basis for allocating manufacturing overhead costs in some costing systems.

Markup

The amount added to the cost price of goods to cover overhead and profit; it calculates the selling price.

Manufacturing Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor, such as maintenance, depreciation, and utilities.

Predetermined Overhead Rate

A rate calculated before a period begins, based on the estimated total manufacturing overhead costs and estimated allocation base, used to allocate overhead to products or job orders.