A Production Manager Notices That When She Triples All of Her

question 17

Multiple Choice

A production manager notices that when she triples all of her inputs simultaneously, her output doubles. The production manager determines that for this range of output, the production function exhibits:

• A)increasing returns to scale.
• B)constant returns to scale.
• C)decreasing returns to scale.
• D)undefined returns to scale.

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Definitions:

Estimated Total Manufacturing Overhead

The anticipated total costs associated with the manufacturing process, excluding direct materials and direct labor.

Plantwide Predetermined Manufacturing Overhead Rate

A single overhead absorption rate calculated for an entire factory, used to allocate manufacturing overhead costs to products.

Machine-Hours

A measure of production output or activity based on the total number of hours machines are operated.

Manufacturing Overhead

All manufacturing costs not directly assignable to specific products. This includes costs related to indirect materials, indirect labor, and factory-related expenses.