If a Firm Uses Absorption Costing,which of the Following Actions

question 53

Multiple Choice

If a firm uses absorption costing,which of the following actions taken by management would increase gross profit even if sales do not increase?

• A)Decreasing production and using items from inventory for sales.
• B)Increasing production and building up inventory.
• C)Increasing fixed costs by investing in new production technology.
• D)Increasing variable costs by purchasing higher-quality materials.

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Definitions:

Concentration Ratio

A measure used to indicate the level of competition within an industry by quantifying the market share held by the largest firms.

Industry Output

The total amount of goods or services produced by all firms within a particular industry.

Five Forces Model

A framework developed by Michael E. Porter to analyze a business's competitive environment in five key areas: competitive rivalry, the threat of new entrants, the threat of substitute products, the bargaining power of suppliers, and the bargaining power of buyers.

Competitive Forces

External factors that influence the competitive position of a firm within an industry, including competition, potential entrants, substitutes, buyers, and suppliers.