If the Ratio of Repairs and Maintenance Expense to Property

question 57

Multiple Choice

If the ratio of repairs and maintenance expense to property, plant, and equipment is higher than expected, which of the following is a plausible explanation?

• A)Routine maintenance on an important piece of machinery was charged to repairs and maintenance expense.
• B)An addition to a building was charged to repairs and maintenance expense.
• C)The company forgot to depreciate all of its equipment.
• D)The company purchased an unusual amount of new equipment.

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Definitions:

Marginal Product

The additional output that is produced by adding one more unit of a specific input, like labor.

Wage Rate

The standard amount of pay given for work performed, typically expressed as an amount per hour or per task completed.

Total Product

The total quantity of output produced by a firm with a given amount of input.

Labor Demand Curve

A graph depicting the quantity of labor that employers are willing to hire at various wage levels, typically showing an inverse relationship between wages and the quantity of labor demanded.