"Economies of Scale" Means That as a Company Produces Larger

question 291

True/False

"Economies of scale" means that as a company produces larger numbers of a particular product, the cost for each unit of the product goes down.

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Definitions:

Direct Materials

refers to raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.

Direct Labor

The cost of wages and benefits for employees who are directly involved in the production of goods or services.

Conversion Cost

The total expenses of direct labor and manufacturing overheads used in transforming raw materials into completed goods.

Manufacturing Overhead

All indirect costs associated with the production process, including salaries of supervisors, maintenance, and utilities in the manufacturing facilities.