The Quantity Equation States That

question 11

Multiple Choice

The quantity equation states that

• A) Money × real output = velocity × price level.
• B) Money × velocity = price level × real output.
• C) None of these answers.
• D) Money × price level = velocity × real output.

---

Definitions:

Absorption Costing

A cost calculation approach encompassing all production expenses, such as direct materials, direct labor, along with both variable and fixed overhead costs, in determining the price of a product.

Unsold Units

Inventory items that have not been sold during a specific period, representing potential revenue that has not been realized.

Absorption Costing Balance Sheet

A financial statement that includes all manufacturing costs (direct labor, direct materials, and manufacturing overhead) in the value of finished goods inventory.

Variable Costing

An accounting method that considers only the variable costs directly attributable to the production of goods, excluding fixed manufacturing costs from inventory valuation.