Normative Economic Statements

question 88

Multiple Choice

Normative economic statements

• A) are statements of "what ought to be."
• B) are statements of "what is."
• C) are statements that may be tested by referring to facts and data.
• D) do not involve value judgments.

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Definitions:

Variable Costing

A cost accounting method that includes only variable costs—costs that change with production levels—in product cost calculations.

Manufacturing Margin

The difference between the cost of manufacturing goods and the sale price, indicating the profitability of production activities.

Unsold Units

Inventory items that have not been sold by the end of a selling period, affecting inventory carrying costs and cash flow.

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.