A Company Observed a Decrease in the Cost Per Unit

question 61

Multiple Choice

A company observed a decrease in the cost per unit. All other things being equal, which of the following is most likely true?

• A) The company is studying a variable cost, and total volume has increased.
• B) The company is studying a variable cost, and total volume has decreased.
• C) The company is studying a fixed cost, and total volume has increased.
• D) The company is studying a fixed cost, and total volume has decreased.
• E) The company is studying a fixed cost, and total volume has remained constant.

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Definitions:

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Service Company

A business that provides intangible products or services to customers rather than physical goods.

Operating Cycle

The period it takes for a business to buy inventory, sell products, and generate cash from operations.

Merchandising Company

A business that purchases finished goods for the purpose of resale without further processing.