Economies of Scale

question 137

Multiple Choice

Economies of scale

• A) are available to small firms but not to large firms due to management inefficiencies.
• B) are achieved when a firm reduces its average cost of production as it produces more.
• C) can be avoided by purchasing supplies and raw materials in large quantities.
• D) help explain the success of small businesses.

Recognize the role of budgeted fixed overhead in controlling overhead costs.

Calculate variances for fixed and variable overhead costs.

Explain the significance of underapplied or overapplied overhead and its implications.

Understand the concept of standard costing and its criticisms.

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