Why Does the Unit Selling Price Increase When Expected Volume

question 8

Multiple Choice

Why does the unit selling price increase when expected volume is lower than budgeted volume?

• A) Variable costs and fixed costs have to be spread over fewer units.
• B) Fixed costs and desired ROI have to be spread over fewer units.
• C) Variable costs and desired ROI have to be spread over fewer units.
• D) Fixed costs only have to be spread over fewer units.

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Definitions:

Capital

Refers to the financial assets or resources that individuals, companies, or governments use to fund their operations and invest in their ventures.

Income

The money received, especially on a regular basis, for work or through investments.

Liability

A company's financial debt or obligations that arise during business operations, to be settled over time through the transfer of economic benefits.

Owner Contribution

Capital injected by the owners into the business, increasing equity.