Consumption Expenditure Includes Spending

question 231

Multiple Choice

Consumption expenditure includes spending

• A)on intermediate goods and services by firms.
• B)on office supplies by firms.
• C)by households.
• D)by households and spending on office supplies by firms.
• E)by governments when they are buying goods and services that consumers also buy.

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Definitions:

Absorption Costing

An approach to accounting that incorporates all costs associated with manufacturing, including direct materials, direct labor, and all overhead costs, both variable and fixed, into the price of a product.

Normal Operating Capacity

The level of production that a company can sustain under normal circumstances without overstretching its resources or machinery.

Inventory Costs

All costs associated with ordering, holding, and managing inventory, not limited to purchase costs, storage, and carrying costs.

Direct Method

A cost allocation method that assigns service departments’ costs directly to producing departments without any intermediate steps.