X Company Occupies One Site and Consists of Departments, T

question 24

Multiple Choice

X Company occupies one site and consists of Departments, T, S and Y. Which of these is an example of an indirect cost if Department T is the cost object?

• A) Building rental
• B) Salary of Department T manager
• C) Commission of the sales persons for Department T
• D) Stationery costs of Department T

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Definitions:

Optimal Output

The level of production at which a firm achieves the highest possible profit, given its cost structure and the market price.

Short-Run

A period in which at least one factor of production is fixed, and firms can only adjust variable inputs.

Supply Curve

A graph illustrating how much of a product a firm will sell at different prices.

Zero-Profit Equilibrium

A situation in competitive markets wherein, due to free entry and exit, firms only earn a normal profit, which is their lowest level of profit necessary to keep them in business.