The Concept of Diseconomies of Scale ________________________

question 135

Multiple Choice

The concept of diseconomies of scale ________________________.

• A) states that the average cost of a unit produced is reduced when the amount of output increases
• B) is not realistic
• C) is not valid for regulated industries
• D) states that beyond a certain point the cost of each additional unit made increases
• E) is an approach for measuring unusable output

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Definitions:

Contra-Revenue Accounts

Accounts used to record reductions in gross revenue, such as sales returns, allowances, and discounts, to arrive at net revenue.

Gross Profit

The financial metric calculated by subtracting the cost of goods sold from total sales revenue, representing the efficiency of a company in managing its production and sales.

Perpetual System

An inventory system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period for accurate financial reporting.