The Measure of Production That Values Output Using Base-Year Prices

question 216

Multiple Choice

The measure of production that values output using base-year prices is called

• A)real GDP.
• B)nominal GDP.
• C)value-added GDP.
• D)underground GDP.

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Definitions:

Fixed Component

The part of cost or expense that remains constant in total regardless of fluctuations in the level of activity or volume.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders, calculated at the beginning of an accounting period.

Overhead Efficiency

The measurement of how effectively a company uses its overhead costs in the production of goods or services.

Predetermined Overhead Rate

This is a rate used to allocate manufacturing overhead costs to products or job orders, estimated by dividing total estimated overhead costs by an allocation base, such as direct labor hours or machine hours.