Explain the Two Main Methods Used to Measure GDP

question 401

Essay

Explain the two main methods used to measure GDP.

---

Definitions:

Predetermined Overhead Rates

Overhead rates calculated before a period starts by dividing estimated overhead costs by an expected allocation base.

Machine-Hours

A measure of production output or activity based on the number of hours machines are operating in the manufacturing process.

Machining

The process of removing material from a workpiece to shape or finish it using machine tools.

Manufacturing Overhead

All indirect costs associated with the production process, excluding direct material and direct labor costs.