The Per-Unit Amount of Three Different Production Costs for Thunderbird

question 113

Multiple Choice

The per-unit amount of three different production costs for Thunderbird, Inc., are as follows: What type of cost is each?

• A) Cost A is fixed, Cost B is mixed, Cost C is variable.
• B) Cost A is fixed, Cost B is variable, Cost C is mixed.
• C) Cost A is variable, Cost B is mixed, Cost C is fixed.
• D) Cost A is variable, Cost B is fixed, Cost C is mixeD. A variable cost stays the same per unit but increases in total when production increases, a fixed cost decreases per unit but stays the same in total when production increases, and a mixed cost decreases per unit and increases in total when production increases.

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Definitions:

Call Premium

The amount by which the call price of a bond or preferred stock exceeds its face value or issue price.

Par Value

The face value of a bond or stock as stated by the issuing company, typically not indicative of market value.

Call Price

The price at which a callable bond or security can be redeemed by the issuer before its maturity.

Negative Covenants

Provisions in a loan agreement that restrict certain actions of the borrower to protect the lender's interests.