Economies of Scale Have a Number of Sources, Including the Ability

question 94

Multiple Choice

Economies of scale have a number of sources, including the ability:

• A) to average out the variable costs of production.
• B) of large-volume producers to utilize specialized employees and equipment.
• C) to adjust the scale of production based upon product saturation in the marketplace.
• D) of to utilize non-specialized employees interchangeably.

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Definitions:

Actual Production

The measure of the quantity of goods or services produced by a company during a specific period.

Flexible Budget

A flexible budget adjusts according to the actual levels of activity experienced, allowing for more accurate comparisons of budgeted to actual performance.

Static Budget

A budget that is set for a specific level of activity and does not change or adjust with the actual level of activity achieved.

Fixed Manufacturing Overhead

The set costs involved in producing a product that do not change with the level of production, such as rent, salaries, and utilities.