The Long-Run Average Total Cost Curve

question 427

Multiple Choice

The long-run average total cost curve

• A)displays declining unit costs so long as output is increasing.
• B)indicates the lowest unit costs achievable when a firm has had sufficient time to alter plant size.
• C)has a shape that is the inverse of the law of diminishing returns.
• D)can be derived by summing horizontally the average total cost curves of all firms in an industry.

Calculate and analyze variances from standard costs, including materials price variance, materials quantity variance, labor rate variance, labor efficiency variance, fixed overhead budget variance, and fixed overhead volume variance.

Apply predetermined overhead rates to work in process inventory.

Understand the flow of costs in manufacturing accounts, including Work in Process, Finished Goods, and Cost of Goods Sold.

Analyze the impact of variances on financial statements.

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Definitions:

Hyperinflation

An extremely high rate of inflation, usually defined as an inflation rate in excess of 50 percent per month.

Nationalization

The process by which a government takes control of a private industry, business, or assets and converts it into state ownership and operation.

Government Price Controls

Measures implemented by a government to regulate the price levels of commodities and services with the aim to maintain affordability, prevent inflation, or ensure a minimum income for producers.

Corruption

The misuse of government power, with which one has been entrusted or assigned, to obtain private gain; includes payments from individuals or companies to secure advantages in obtaining government contracts, avoiding government regulations, or obtaining inside knowledge about forthcoming policy changes.