The Figure Given Below Shows Three Short Run Average Total

question 90

Multiple Choice

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm. Figure 21.3 Which of the following would account for the shape of the long-run average-total-cost curve in Figure 21.3?

• A)Low worker morale
• B)Low productivity
• C)Administration overhead
• D)Specialization of labor
• E)Managerial problems

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Definitions:

Variable Manuf. Overhead

Costs that vary with the level of production, such as indirect materials and utilities used in manufacturing.

Variable Overhead Spending Variance

The difference between actual variable overhead costs and the budgeted costs for the actual level of activity, indicating overspending or underspending.

Labour Efficiency Variance

The difference between the budgeted labor hours or costs and the actual labor hours or costs incurred.