With a Given Plant Size, an Increase in Output Will

question 325

Multiple Choice

With a given plant size, an increase in output will NOT result in an increase in

• A) total cost.
• B) average fixed cost.
• C) total fixed cost.
• D) average variable cost.

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production of goods, such as utilities and salaries for non-direct labor.

Direct Materials Costs

The expense associated with raw materials or components that are directly included in a manufactured product.

Predetermined Overhead Rate

A predetermined overhead rate is a rate calculated before a period begins, used to allocate overhead costs to products or services based on a specific activity base.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process, used for planning and costing purposes.