Below are some cost data pertaining to Plant 1,which has total fixed costs of $1,000.Suppose that Plant 2 is exactly twice the size of Plant 1 while using (at economic capacity) twice the amount of labour and materials,and that it produces exactly twice the output.Further,assume that the prices of these inputs do not change.
-Refer to the information above to answer this question.What comment can be made in reference to returns to scale between Plants 1 and 2?
Definitions:
Financial Accounting
The phase of accounting concerned with providing information to stockholders, creditors, and others outside the organization.
Feasibility Analysis
An assessment of the practicality and potential success of a proposed business idea or project.
Maximum Daily Production
The highest quantity of goods or services a company can produce in a single day under normal operating conditions.
Managerial Accounting
The phase of accounting concerned with providing information to managers for use within the organization.
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