An Increase in Output Would Result in No Change in Long-Run

question 318

Multiple Choice

An increase in output would result in no change in long-run average costs when there are

• A) economies of scale.
• B) diseconomies to scale.
• C) constant returns to scale.
• D) diminishing marginal product.

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Definitions:

Variable Overhead Rate

This refers to the rate at which indirect, variable costs accumulate over a given period, often linked to production or activity levels.

Efficiency Variance

A measure used in cost accounting to assess the difference between actual and expected usage of resources, often related to time or cost of labor.

Budget Variance

The difference between the budgeted or planned amount and the actual amount spent or received.

Predetermined Overhead Rate

A rate calculated at the beginning of a period, used to apply manufacturing overhead costs to products based on a chosen activity base such as machine-hours or labor-hours.