Economic Analysis

question 44

Multiple Choice

Economic analysis:

• A)involves some simplifications of reality.
• B)is only vaguely related to reality because if it did so coincide, it would not still be theory.
• C)is impossible, because of the impossibility of a controlled experiment.
• D)if it is good theory, involves no simplification of reality.
• E)involves so much distortion of reality as to be worthless.

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Definitions:

Actual Labor-Hours

Actual labor-hours represent the real number of labor hours worked by employees, as opposed to planned or estimated hours, often used in productivity and costing analyses.

Direct Material Standards

The anticipated cost and quantity of materials required for the production of goods or services.

Actual Cost

Actual cost refers to the exact amount of expenses incurred for producing a product or performing a service, contrasted with estimated or budgeted costs.

Standard Cost System

An accounting system that uses predetermined costs for product costing and decision making, facilitating budgeting and variance analysis.