A Profit-Seeking Firm Will Choose the Combination of Inputs That

question 77

Multiple Choice

A profit-seeking firm will choose the combination of inputs that maximizes profit,based on the:

• A)local price of each factor of production.
• B)ratio of each factor of production.
• C)substitutability of each factor of production.
• D)All of these statements are true.

Recognize the importance of executive summaries and their placement in reports.

Evaluate the effectiveness of recommendation statements.

Analyze the information needed to support decision-making in recommendation reports.

Understand the structure and content requirements for the results section of a recommendation report.

---

Definitions:

Variable Costing

An accounting method that includes only variable production costs (materials, labor, and overhead) in product costs and treats fixed manufacturing overhead as an expense of the period.

Period Cost

Expenses that are not directly tied to production activity and are expensed in the period in which they are incurred.

Variable Costing

A technique in accounting that encompasses only costs that vary with production (including direct materials, direct labor, and variable manufacturing overhead) in the pricing of products.

Period Cost

Expenses that are not directly tied to the production of goods and are instead associated with time periods, such as administrative salaries.