Beatrice Is Comtemplating Whether to Offer a Warranty on Her

question 38

Multiple Choice

Beatrice is comtemplating whether to offer a warranty on her product.She should remember that warranties are important for products:

• A)that are relatively inexpensive.
• B)that are frequently purchased.
• C)that are relatively complex to repair.
• D)regardless of how they are positioned in the market.

---

Definitions:

Variable Costing

An accounting approach that includes only variable costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, excluding fixed manufacturing overhead.

Unit Product Cost

The calculated cost of producing a single unit of product, which includes both fixed and variable costs.

Total Period Cost

The entire sum of expenses incurred by a business during a specific period, including both fixed and variable costs.

Absorption Costing

An accounting method that includes all manufacturing costs (direct labor, materials, and overhead) in the cost of a product.