16-86 Which of the Following Is Consistent with Economies of Scope

question 28

Multiple Choice

16-86 Which of the following is consistent with economies of scope? The subscript "b" refers to a banking firm,"s" for a securities firm,"AC" is average costs and "TC" is total costs.

• A)AC_b+s > AC_b + AC_s.
• B)AC_b+s = AC_b + AC_s.
• C)AC_b+s < AC_b + AC_s.
• D)TC_b+s < TC_b + TC_s.
• E)TC_b+s > TC_b + TC_s.

Analyze the effects of activity levels on budgeted costs.

Apply flexible budgeting to various components of the master budget.

Understand the principles of management by exception.

Grasp the role of activity indexes in budgeting.

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Definitions:

Quasi-contract Liability

Refers to the legal responsibility imposed by the court to prevent unjust enrichment when no actual contract exists between parties.

Implied Contract

A contract formed by the actions, behaviors, or circumstances of the parties involved, rather than by written or spoken agreement.

Promissory Estoppel

A legal principle preventing a party from retracting a promise made, when the other party has reasonably relied on that promise to their detriment.

Express Contract

An agreement with terms explicitly stated by the parties involved, either orally or in writing.