Volume-Based Measures May Be Used to Apply Overhead When

question 52

Multiple Choice

Volume-based measures may be used to apply overhead when:

• A) production runs are of various sizes and overhead costs are directly proportional to the size of the run.
• B) production runs are of various sizes but each run has a constant setup time.
• C) purchasing costs are related to the number of purchase orders not the number of items bought.
• D) material handling costs are driven by the number of materials issued to production, and components are used differentially by different products.

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Definitions:

Patents

Legal documents granting inventors exclusive rights to their inventions for a certain period, preventing others from making, using, or selling the invention without permission.

Government Franchising

A method whereby the government grants a private entity the right to operate a public service or business within a certain territory or function.

Essential Resource

A resource considered vital for the survival of an economy or the operation of a business.

Long Run

A period in economics sufficient for all markets to adjust, including production levels, prices, and resource allocation, often contrasted with the short run where some factors are fixed.