All of the Following Options Are Available to a Firm

question 72

Multiple Choice

All of the following options are available to a firm when capacity exceeds demand except to

• A) lay off workers and shut down a portion of the facility.
• B) operate on a shorter work week.
• C) produce other goods or services.
• D) sell unused facilities.
• E) give away some of the products to selected customers.

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Definitions:

Unit Product Cost

The total cost associated with producing one unit of product, including materials, labor, and overhead.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that varies directly with production volume.

Variable Costing

Accounting practice that integrates only variable cost elements of production (direct materials, direct labor, and variable manufacturing overhead) into the valuation of products.

Net Operating Income

The total profit of a company derived from its normal business operations, excluding expenses and revenues from non-operating activities.