Which of the Following Would Tell Us That Resources Are

question 349

Multiple Choice

Which of the following would tell us that resources are NOT flowing to their highest valued uses?

• A) short-run economic profits
• B) short-run economic losses
• C) long-run economic profits
• D) Some firms are just breaking even.

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Definitions:

Fixed Manufacturing Overhead

Costs in the manufacturing process that do not vary with the volume of production, such as salaries of managers and depreciation of factory equipment.

Volume Variance

The difference between the expected volume of units produced or sold and the actual volume, affecting cost allocations in budgeting.

Predetermined Overhead Rate

An estimated charge per unit of activity used to allocate manufacturing overhead costs to products, calculated at the beginning of a period based on expected costs and activity levels.

Variable Component

A portion of a cost or expense that varies directly with the level of activity or volume, such as the amount of raw materials used in production.