Which of the Following Is an Accurate Statement About Economies

question 29

Multiple Choice

Which of the following is an accurate statement about economies of scale?

• A)Production costs per unit are less in a large facility than in a small facility
• B)The more product a company makes,the lower its variable production costs
• C)Economies of scale are identical to throughput
• D)Doubling factory size typically doubles fixed costs
• E)Companies with economies of scale have high capacity utilization

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Definitions:

Effective Interest Method

A technique used in accounting to allocate interest expense or income over the life of a financial instrument at a constant interest rate.

Semiannually

Occurring twice a year, typically every six months.

Discount Amortized

The process of gradually reducing the discount on bonds payable over the life of the bonds as an interest expense.