Cindy Operates Birds-R-Us,a Small Store Manufacturing and Selling 100 Bird

question 207

Multiple Choice

Cindy operates Birds-R-Us,a small store manufacturing and selling 100 bird feeders per month.Cindy's monthly total fixed costs are $500,and her monthly total variable costs are $2,500.If for some reason Cindy's fixed cost fell to $400,then her _____ costs would _____.

• A)average fixed;increase
• B)average total;decrease
• C)marginal;decrease
• D)average variable;decrease

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Definitions:

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the costs to convert raw materials into finished goods.

Equivalent Units

A concept used in cost accounting to convert units of production into an amount of completed units to measure progress.

Conversion Costs

Costs specifically associated with converting raw materials into finished goods, which include labor and overhead.

Whole Units

The number of units in production during a period, whether completed or not.