To Calculate GDP Once National Income Has Been Computed, We

question 63

Multiple Choice

To calculate GDP once national income has been computed, we must

• A) add indirect business taxes and transfers and subtract profits.
• B) add depreciation and subtract indirect business taxes.
• C) add depreciation and indirect business taxes and transfer payments and subtract other business income adjustments and net U.S. income earned abroad.
• D) add indirect business taxes and transfers and subtract depreciation, other business income adjustments, and net U.S. income earned abroad.

---

Definitions:

Fixed Manufacturing Overhead

Consists of manufacturing costs that do not change with the level of production, such as salaries of supervisors and rent for factory premises.

Denominator Level

The level of activity used to compute the fixed manufacturing overhead rate in absorption costing, affecting inventory and cost of goods sold.

Budget Variance

The difference between budgeted amounts and actual amounts spent or received.

Volume Variance

The difference between the expected volume of production or sales and the actual volume, affecting budgeting and costing.