To Maximize Its Profit,in the Short Run a Perfectly Competitive

question 154

Multiple Choice

To maximize its profit,in the short run a perfectly competitive firm decides

• A) what price to charge for its product.
• B) what quantity of output to produce.
• C) whether to exit the market.
• D) whether to increase the size of its plant.
• E) how much advertising it should undertake.

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Definitions:

Materials Price Variance

This measures the difference between the actual cost of materials used in production and the standard cost expected for those materials, indicating how efficiently an organization is purchasing materials.

Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, calculated as (Actual rate - Standard rate) x Actual hours.

Standard Hourly Rate

The predetermined cost per hour for labor, used in budgeting and costing to assign labor costs to products and services.

Standard Quantity

The budgeted or pre-determined amount of material or input expected to be used during a manufacturing process.