Perhaps the Only Time Economies of Scale Are Not Subject

question 87

Multiple Choice

Perhaps the only time economies of scale are not subject to low-cost duplication is when the ________ size of operations is a significant percentage of ________ in an industry.

• A) minimum; marginal demand
• B) efficient; total demand
• C) maximum; marginal demand
• D) efficient; marginal demand

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Definitions:

Unused Capacity

Refers to the available production or service facility resources that are not currently being used.

Predetermined Overhead Rate

A rate used in cost accounting to allocate manufacturing overhead costs to products based on a planned level of activity or driver, such as machine hours or labor hours.

Machine-Hours

A measure of production volume or activity based on the number of hours machines are in operation.

Unused Capacity

The available production capability that is not being utilized by a company.