The Relationship Between the Quantity of Inputs and the Quantity

question 128

Multiple Choice

The relationship between the quantity of inputs and the quantity of outputs is called:

• A) an input-output function.
• B) a production function.
• C) a cost function.
• D) a resource function.

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Definitions:

Absorption Costing

A method of inventory costing in which all costs of production (both fixed and variable) are treated as product costs.

Gross Margin

Gross margin is the difference between revenue and the cost of goods sold, divided by revenue, expressed as a percentage. It measures how much a company earns taking into consideration the costs that it incurs for producing its products or services.

Variable Costing

An accounting method that includes only variable costs—costs that change with production levels—in the calculation of cost of goods sold and excludes fixed costs.

Net Operating Income

The total earnings from a company's operations after deducting operating expenses but before interest and taxes.