Which of the Following Is NOT a Reason That Companies

question 26

Multiple Choice

Which of the following is NOT a reason that companies use standard costs?

• A) To establish performance standards
• B) To prepare the budget
• C) To achieve higher levels of sales
• D) To set the sales prices of their products and services

---

Definitions:

Reallocation

The process of redistributing resources or assets from less productive uses to more productive ones in order to enhance efficiency and economic output.

Diminishing Returns

A rule that asserts when one input in the production process is augmented and the rest remain unchanged, the resultant extra production will ultimately diminish.

Marginal Revenue Product

The additional revenue generated by employing one more unit of input, such as labor or capital.

Economic Rent

The excess payment made for a factor of production over its opportunity cost.