Economic Principles

A limiting factor (or key factor) is any constraint that restricts the volume of activity of an organization, such as labor, materials, or machine capacity. It is the factor that prevents the company from achieving higher sales or production.

Equivalent units are a measure of the work done on partially completed units, expressed in terms of the number of fully completed units that could have been produced with that same effort.

A main product is defined by its primary economic purpose and is typically produced in significantly larger quantities compared to incidental by-products.

In most production processes, the manufacturer has little control over the relative quantities of by-products generated, as they are an inherent result of producing the main product.

The split-off point is the specific stage in a production process where joint products become separately identifiable.

Taylor's differential piece rate system involves setting two different rates: a lower rate for those who produce less than the standard output and a higher rate for those who meet or exceed the standard.

Normal capacity is the production level expected to be achieved over a period of time under normal circumstances, smoothing out the seasonal or cyclical fluctuations in production.

Obsolescence occurs when an asset becomes outdated or inefficient due to technological advancements, even if the asset is still physically functional.

Profits decline at later stage in case of growth phase.Hence, it is the right answer.

A pharmaceutical company gives a push to its new drug aggressively and later when the sales start declining in the sales cycle it gives it another push due to which a cycle of lesser magnitude starts of. Hence, it is the right answer.

Sales of kitchen appliances show growth slump and maturity pattern as their sales grow rapidly when introduced, then it falls to a petrified level and then it is sustained by late adopters buying the product for the first time and the early adopters that replace the product. Hence, it is the right answer.

 Crux means essential or deciding point.

Defectives are units that do not meet quality standards but can be repaired or reworked to become acceptable products. This process incurs additional costs.

Material control involves both accounting aspects (recording transactions) and operational aspects (the physical flow and usage of materials in the production process).