Deena Operates a Coffee Shop Located near the University Campus

question 81

Multiple Choice

Deena operates a coffee shop located near the university campus. Recently, Deena decided to raise the price of all the products she sells. According to the law of demand, Deena can expect:

• A) sales to decrease.
• B) sales to increase.
• C) to incur an operating loss.
• D) to incur an operating profit.

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Definitions:

Variable Manufacturing Overhead

Costs of manufacturing that vary directly with the level of production, such as utilities and materials.

Variable Costing

An accounting method that only includes variable production costs (materials, labor, and overhead) in product cost calculation, excluding fixed overhead.

Unit Product Cost

The total cost associated with producing one unit of a product, including materials, labor, and overhead.

Direct Labor Cost

The total cost incurred by a company for the wages of workers who are directly involved in the manufacturing or production process.