If a Firm Enjoys Lower Costs Due to a Complex

question 31

Multiple Choice

If a firm enjoys lower costs due to a complex labor-intensive process,which of the following statements would then be true?

• A)Cutbacks in volume will always raise unit costs
• B)The firm is unconcerned with labor turnover
• C)An example of this process could be the practice of anti-trust law
• D)The firm's average cost rises due to moving down the learning curve
• E)The process is likely a repetitive manufacturing process such as two-piece aluminum can manufacturing

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Definitions:

Factory Overhead

The indirect costs related to manufacturing, including utilities, maintenance, and salaried staff expenses that cannot be directly traced to specific units produced.

Machine Hours

A measure of production time, calculated by counting the number of hours that machinery is operating in the production of goods.

Raw Materials

The basic substances or components that are processed or combined to manufacture finished goods.

Journalize

The process of recording financial transactions in a company’s accounting records, or journal, in chronological order.