When the Price of a Good or Service Changes

question 138

Multiple Choice

When the price of a good or service changes,

• A)the supply curve shifts in the opposite direction.
• B)the demand curve shifts in the opposite direction.
• C)the demand curve shifts in the same direction.
• D)there is a movement along a given demand curve.

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Definitions:

Direct Materials Budget

A detailed plan showing the amount of raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories.

Direct Labor Budget

A detailed plan that shows the direct labor-hours required to fulfill the production budget.

Production Budget

An estimate of the total amount of production, in units, that a company needs to meet its sales goals and inventory policies.

Master Budget

A number of separate but interdependent budgets that formally lay out the company’s sales, production, and financial goals and that culminates in a cash budget, budgeted income statement, and budgeted balance sheet.