Use the Following Statements to Answer This Question: I

question 85

Multiple Choice

Use the following statements to answer this question: I. Under perfect competition, an upward shift in the marginal cost curve (perhaps due to a higher price for a variable input) also shifts the average variable cost curve upward.
II) Under perfect competition, an upward shift in the marginal cost curve (perhaps due to a higher price for a variable input) reduces firm output but may increase firm profits.

• A) I and II are true.
• B) I is true and II is false.
• C) II is true and I is false.
• D) I and II are false.

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Definitions:

Weighted-Average Method

An inventory costing method that assigns a cost to inventory on the basis of the average cost of all similar items in inventory, weighted by the quantity of each item.

Direct Materials Cost

The cost of raw materials and components that go directly into the production of a product.

Work In Process Inventory

The value of all the materials, labor, and overhead costs for products that are partially completed by a company.

Equivalent Unit

A measure used in cost accounting to express the amount of work done on units of production during a period, considering partially completed units.