When Using a Flexible Budget, a Decrease in Activity Within

question 158

Multiple Choice

When using a flexible budget, a decrease in activity within the relevant range:

• A) decreases variable cost per unit.
• B) increases variable cost per unit.
• C) decreases total costs.
• D) increases total costs.

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Definitions:

Materials

Items or supplies used in the production of goods, considered part of the direct costs in manufacturing.

FIFO Method

"First In, First Out," an inventory valuation method that assumes goods are sold in the order they are acquired, impacting the cost of goods sold and inventory value.

Equivalent Units

A term used in process costing to measure the amount of work done on incomplete products, converted into an equivalent number of fully completed units.

Materials

Substances or components required in the production of goods or in the provision of services.