The Least Costly Way to Produce Any Given Level of Output

question 75

Multiple Choice

The least costly way to produce any given level of output is indicated by

• A) the point of intersection between the isoquant corresponding to that level of output and the Y-axis.
• B) the point of intersection between the isoquant corresponding to that level of output and the X-axis.
• C) the point of tangency between an isocost line and the isoquant corresponding to that level of output.
• D) the isocost line corresponding to that level of output.

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Definitions:

Variable Costing

An accounting method that only allocates variable costs to the inventory; fixed manufacturing overhead is expensed as incurred.

Cost Structure

The composition of a company's costs, both fixed and variable, that are incurred in the operation of its business.

Variable Costing

An accounting method that only considers variable costs - costs that change with production volume - in calculating the cost of goods sold.

Direct Materials Costs

The expenses for raw materials that are directly used in the manufacturing of a product.