The Marginal Propensity to Consume Is Always Greater Than Unity

question 2

True/False

The marginal propensity to consume is always greater than unity.

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Definitions:

Labor Rate Variance

The difference between the actual cost of labor and the budgeted or standard cost of labor, used as a measure of performance in cost control.

Average Cost

A financial metric calculated by dividing the total cost of goods available for sale by the total number of items available for sale, used to determine the profitability of sales.

Fixed Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs, attributed to variations in the number of units produced.

Standard Fixed Manufacturing Overhead Rate

A predetermined rate used to assign fixed manufacturing overhead costs to products based on a consistent activity base.