The Finance Department of Neptune Industries has to audit expenses and profits made each year.It creates separate databases for costs accrued in the form of equipment used in the company and for other costs such as costs of accounting, rent, and managerial salaries.Which of the following is the subject of economies of scale in the described scenario?
A)Research and development expenses
B)General and administrative costs
C)Incentives and promotional costs
D)Advertising expenses

Question

Quizplus · Accepted Answer

General and administrative costs, which include accounting, rent, and managerial salaries, are the subject of economies of scale in the described scenario. This is because these costs can be spread out over a larger volume of production, resulting in lower costs per unit produced. Research and development expenses, incentives and promotional costs, and advertising expenses are not mentioned as relevant to the described scenario.

The Finance Department of Neptune Industries Has to Audit Expenses