A CPA Recently Has Come to Expect Higher Prices for Expert

question 51

Multiple Choice

A CPA recently has come to expect higher prices for expert tax advice in the near future.We would expect

• A)the CPA to supply more expert tax advice now than she was supplying previously.
• B)the CPA to supply less expert tax advice now than she was supplying previously.
• C)the demand for this CPA's expert tax advice to fall.
• D)no change in the CPA's current supply;instead,future supply will be affected.

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Definitions:

Variable Costing

A costing approach where only the variable costs involved in production—such as raw materials, direct labor, and variable manufacturing expenses—are included in the cost of goods sold, leaving out fixed manufacturing overheads.

Contribution Margin

The amount by which the sales of a product exceed its variable costs, representing the portion of sales revenue that contributes to covering fixed costs and generating profit.

Unit Product Cost

The total cost (direct materials, direct labor, and overhead) to produce one unit of a product.

Absorption Costing

An accounting method that includes all manufacturing costs (direct material, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.