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:

Common Stock

represents units of ownership in a corporation, giving shareholders voting rights and a share in the company’s profits through dividends.

Market Value

The current quoted price at which an asset or service can be bought or sold in a marketplace.

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest of shareholders.

Stock Option Plan

A compensation strategy used by companies to grant employees the right to purchase company shares at a predetermined price after a specified period.