When Higher Levels of Output Cost Less Per Unit to Produce,the

question 40

Multiple Choice

When higher levels of output cost less per unit to produce,the facility realizes

• A)best operating level.
• B)capacity cushion.
• C)diseconomies of scale.
• D)economies of scale.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, labor, and both variable and fixed overhead - in the cost of a product.

Net Operating Income

An entity’s income after all operating expenses have been deducted from total revenue, excluding taxes and interest charges.

Variable Costing

A costing method in which fixed manufacturing overhead is not assigned to the product, but rather treated as an expense of the period.

Absorption Costing

is an accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.